It’s no secret that John Paulson’s hedge fund Paulson & Co. has had a bad year.
Paulson is facing up to $2.4 billion in redemption requests, Zahra Burton at Bloomberg TV reported. The requests were reportedly $1.5 billion at the beginning of the month, but it’s gone up since then.
Perhaps partly because of that, Paulson is a big seller of the IPO of Delphi automotive — 80% of the shares being sold for Delphi belong to Paulson, according to Bloomberg TV. The shares are currently being sold at around $22 to $24 for each, and Paulson could make $580 million from the sell.
(Refresher: Delphi filed for bankruptcy protection in 2005, and have restructured pretty successfully. But since this is a secondary offering, the money from the IPO goes to shareholders that sell, like Paulson)
But Paulson’s the lone wolf here — he’s the only one of Delphi’s four largest shareholders to sell so much of their stake on the IPO, according to the Wall Street Journal. Other investors are sticking with the company in hopes for higher returns. Paulson’s ownership stake will decrease to 16% from 22% if he sells those shares.
Analysts have said the Delphi share prices are being pushed down by volatile market conditions, so it’s possible that the stock will do better in the long-term, but Paulson isn’t content to wait around.
In addition, Paulson is also trying his best to mollify worried clients. He told investors at a recent meeting that he’s reduced net exposure among his main funds to 30%, down from 60% reported four month ago, sources told Bloomberg.
Here’s a video of Burton’s report: