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John Paulson ups stake in Tiffany ahead of $16bn LVMH buyout

Paulson & Co, the hedge fund run by billionaire investor John Paulson (pictured), has upped its stake in jewelry maker Tiffany & Co (TIF), which is in the middle of a sale to luxury goods giant LVMH.

The New York-based investment fund disclosed a 350% increase in its stock position in Tiffany, owning 603,800 shares by the end of the first quarter of 2020, valued at around $77m on current prices, according to a recent regulatory filing.

Paulson’s decision to stockpile shares of the US jewelry retailer comes at a time when Tiffany’s is moving forward with an acquisition by luxury brand holding LVMH, headed by French billionaire Bernard Arnault, at a price of $135 per share, valuing the business at $16.2bn.

Tiffany’s board of directors has already approved the acquisition, but the completion of the deal has been pushed back to October 2020, after Australia’s foreign investment regulator asked for a postponement.

According to this recent filing and the price offered by LVMH, Paulson’s transaction would net a potential $2m for his hedge fund, even though it is unclear if the billionaire plans to hold on to the stock for a longer period.

Tiffany shares recouped from their 23 March bottom that followed the coronavirus sell-off and have been trading relatively in line with their early-2020 prices as the completion of LVMH’s acquisition seems like a done deal.

The stock is trading at just over $126 and has only lost 6% of its value so far this year, compared to an 8.8% drop in the S&P 500 during the same period.

TIF stock chart performance

Paulson’s stake at Tiffany seems to follow the billionaire’s event-driven philosophy, which seeks to profit from mergers, bankruptcies, restructuring and other corporate events that may boost the value of the hedge fund’s holdings once things are settled.

After a successful career in investment banking, John Paulson founded Paulson & Co. in 1994 to put his experience at mergers and acquisitions to work.

In 2005, the fund took a short position on credit default swaps, anticipating the collapse of the subprime mortgage market. After the crisis unfolded, Paulson jumped to Wall Street’s hall of fame by racking up around $15bn in profits in 2007. His investment fund manages around $8.7bn for his investors according to recent estimates.

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Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.