Billionaire John Paulson Has Bought General Motors, Verizon, and Caesars Entertainment

Might you want to buy into some of these companies, too?

Jun 9, 2014 at 8:40AM

The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider Paulson & Co., founded in 1994 by investing giant John Paulson. Owned by its employees, the company has specialized in merger arbitrage, among other things, profiting when one company buys or merges with another (or merely announces plans to do so). It has grown into one of the largest hedge fund companies in the world.

Paulson & Co.'s latest 13F report shows that it has initiated or increased its positions in Caesars Entertainment Corp (NASDAQ:CZR), General Motors Company (NYSE:GM), and Verizon Communications (NYSE:VZ).

Caesars Entertainment is weighed down with more than $20 billion of debt after a leveraged buyout, and one way it's dealing with that is by having Caesars Acquisition buy some of its assets, such as its promising online gambling business. Caesars Entertainment, the largest gambling operator in Atlantic City, is also considering shedding its properties there. The company's first-quarter results were not encouraging, as casino revenue slid 9% year over year (while total revenue dropped 2%), and operating income plunged 50%. A bright spot for the company is Las Vegas, where some investments are starting to pay off, such as an entertainment center with the world's tallest Ferris wheel. A big competitive disadvantage for the company has been not having gambling properties in Macau, where gambling has been growing briskly. Caesars does have a South Korea property in the works, though.

General Motors Company is facing a big headwind in costs related to many recalls and litigation. (Through May, it has recalled close to 16 million vehicles this year.) Despite that, its first-quarter results exceeded expectations -- though earnings took an 82% hit. The company has been doing many things right, such as applying more discipline to pricing and incentives. Sales in May came in 13% higher than last May, with fleet sales up 21% and retails sales up 10%, outpacing Ford Motor Company. Its momentum might eventually be slowed by recall-related costs, but for now, sales are growing briskly. New CEO Mary Barra reported that an internal investigation into the fatal faulty switches found "a pattern of incompetence and neglect," and she has fired some 15 employees in response. General Motors stock yields a generous 3.5% dividend.

Verizon Communications is a telecom titan, with bulls loving its market dominance and competitive strengths -- and its resulting fat profit margins (net margins recently topped  11%). It boasts more than $20 billion in annual free cash flow, too, which can help it further build out its network while generously rewarding shareholders. More than a few hedge funds are snapping up shares. Verizon recently bought the 45% of Verizon Wireless that it didn't own from Vodafone. That bodes well, given that global mobile data usage grew by 81% in 2013 year over year and is expected to grow 11-fold by 2018, per a Cisco Systems report. The company's first-quarter results were mixed, though, featuring double-digit earnings and operating income growth but expectation-missing earnings. Verizon stock offers investors a fat 4.2% dividend yield.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour. (That's almost as much as the average American makes in a year!) And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click here to discover more about this industry-leading stock and join Buffett in his quest for a veritable landslide of profits!

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, owns shares of Ford and Verizon Communications. The Motley Fool recommends Cisco Systems, Ford, General Motors, and Vodafone. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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