John Paulson scored well with his telecom picks when AT&T Inc. (NYSE:T) announced its plans last week to takeover Leap Wireless International, Inc. (NASDAQ:LEAP).
Tracking John Paulson’s right picks in the telecom industry in the recent past, Kate Kelly of CNBC feels John Paulson is again finding luck with his original investment style, particularly making a right call on the telecom sector.
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John Paulson scores in Softbank deal
Last month, after a considerable wait, Sprint Nextel Corporation shareholders finally provided the vote that should permit the $21.6 billion deal to acquire 78 percent of the U.S. wireless carrier to be completed in July.
Earlier, DISH Network Corp dropped out of the bidding to buy mobile phone carrier Sprint Nextel Corporation (NYSE:S), paving the way for Sprint Nextel Corporation’s acquisition by Softbank Corp (TYO:9984) (OTCMKTS:SFTBF).
The American hedge fund manager, John Paulson, has won big on the mobile carrier Softbank Corp (TYO:9984) (OTCMKTS:SFTBF)’s deal in which he lobbied successfully for a higher price and a bigger cash component. He enhanced his returns from MetroPCS’s sale to the T-Mobile USA, Inc. (TMUS) unit of Deutsche Telekom AG (FRA:DTE) (PINK:DTEGY) (ETR:DTE) by demanding better terms of offer coupled with less debt.
John Paulson scores big with Leap Wireless
A few days back, AT&T Inc. (NYSE:T), one of the major telecommunications carriers in the domestic market agreed to buy Leap Wireless International, Inc. (NASDAQ:LEAP), a prepaid wireless provider for $15 per share or $1.2 billion in cash to enhance its competitiveness in the mobile market.
According to recent filings, John Paulson is Leap’s third largest shareholder with 7.8 million shares or about 10 percent of the shares outstanding.
The recent cash deal announcement by AT&T Inc. (NYSE:T) values Leap Wireless International, Inc. (NASDAQ:LEAP) at 88 percent above its share price. The American hedge fund manager is thus set to reap even more from his Leap’s holdings.
John Paulson founded the New York-based hedge fund company, Paulson & Co with a clear focus on the merger arbitrage. Recently, his hedge fund posted good return in the arbitrage category as well.
Two of his merger-arb funds posted standout performances this year, with over 16 percent in the levered version and 8 percent in the un-levered version through June. This performance is commendable when compared with the low single digit return posted by average hedge funds.