Business

John Paulson dumps stake in gold mining company months after recommending it to investors

Hedge fund billionaire John Paulson dumped a sizable chunk of his stake in South African gold mining company AngloGold Ashanti just months after recommending it to investors as one of his top investment picks.

Paulson unloaded 13 percent of his huge stake in AngloGold Ashanti — which has long counted him as a major shareholder — in the third quarter. He now owns 28.4 million shares, down from 32.7 million at the end of the second quarter, when he owned 8.54 percent of the company, according to regulatory filings.

Paulson — who made headlines recently for his $100 million donation to New York’s Central Park Conservancy — made his billions from shorting the subprime housing market in 2007.

After the financial crisis, Paulson became the world’s leading gold bug, with gold accounting for 43 percent of his US stock portfolio.

But his reputation as a savvy investor has taken a hit in the past two years, as poor bets in gold-mining stocks, among others, dragged down two of his biggest funds.

Even as the precious metal shined, AngloGold Ashanti’s fall pummeled Paulson’s funds Advantage and Advantage Plus.

Those funds were down 12.64 percent and 18.51 percent, respectively, through October, ranking them among the top 10 hedge-fund losers, followed by HSBC. Last year, the funds fell 20 percent and 52 percent, respectively.

On May 16, Paulson offered up AngloGold Ashanti as one of his top picks at the widely followed Ira Sohn conference in New York, where hedge fund bigwigs talk their book.

“The stock has not been a good performer over the last couple of years,” he said. “For me, that represents an opportunity.”

It may have been an opportunity for Paulson to sell.

After his comments, when the stock was trading around $31, shares rose to a high of about $37 in early June. It has been volatile since then and yesterday fell below $30, hitting a 52-week low. The stock slid around 4 percent after Paulson disclosed his diminished stake in filings.

AngloGold Ashanti remained Paulson’s biggest US stock holding by market value at the end of Q3, accounting for just over $1 billion of his $12.7 billion of US equity holdings.

Last quarter, Paulson held steady with most of his other gold picks, including the SPDR Gold ETF.