Hedge Fund titan John Paulson bought 1.87 million shares of InterOil Corporation (NYSE:IOC) during the first three months of the year, according to regulatory filings. Unfortunately if he’s wrong about the company, he could be in for a world of hurt.

John Paulson

The New York Post’s Kaja Whitehouse pointed out the purchase, which makes Paulson InterOil Corporation (NYSE:IOC)’s eighth largest shareholder. His stake covers 1.87 million shares of the company and is worth approximately $160 million.

Investor Concerns About InterOil

Shares of InterOil have increased 60 percent in the wake of the company’s claims that a deal it’s been awaiting for quite some time is finally coming to fruition. However, the stock started falling on Friday amidst concerns about whether it will continue its upward trend.

The company has said it has access to large natural gas and oil reserves in Papua New Guinea, although it hasn’t extracted any of the resources yet. Investors have since questioned whether InterOil’s claims are true.

Whitehouse reports that Whitney Tilson is shorting the company because he doesn’t believe there are any commercially developable resources. Tilson’s been speaking out about InterOil since at least late 2011.

InterOil’s Claims

InterOil Corporation (NYSE:IOC) said in March that it had gotten a number of bids from various partners wanting to get in on its natural gas claim. The company said last week that it was going into “exclusive negotiations with ExxonMobil Papua New Guinea Ltd.”

It was that news which sent the company’s stock soaring as investors speculated that it would be bought out by one of the world’s large energy companies. However, critics said that the company has released promising news in the past and then failed to deliver on the news. Investors also seemed to realize late last week that the deal, if there is one in the works, isn’t close to being finished.

According to Whitehouse, Paulson’s bet on InterOil Corporation (NYSE:IOC) is similar to the losing one he made on Sino-Forest in 2011, which lost his firm $700 million in the wake of a scandal involving the company’s accounting practices.