Remember Warren Buffett's saying about being greedy when others are fearful? Take a look at Hewlett-Packard Co. .
Its stock had fallen more than 5 per cent in premarket trading Monday, after a leaked memo from chief executive Leo Apotheker warned executives of "another tough quarter" and asked them to "watch every penny and minimize all hiring." The company then abruptly decided to report earnings on Tuesday morning, a day ahead of schedule. The earnings were bleak and missed analyst estimates. HP also cut its forecasts for subsequent quarters.
Enough to make anyone nervous, right? Consider this, then -- an investor hailed in recent years as one savvy trend-picker just bought about $1-billion (U.S.) worth of HP stock in the first quarter. That would be John Paulson, who heads the Paulson & Co. hedge fund.
According to the fund's 13-F filing with the Securities and Exchange Commission, it also bought about 17.3 million shares of Transocean Ltd. , the company that operated the BP Plc Deepwater Horizon rig that exploded in the Gulf of Mexico last year. Paulson is now the largest shareholder in the company.
Paulson also kept its $4.4-billion position in SPDR Gold Trust unchanged, at a time when other investors such as George Soros sold almost $800-million, as my colleague Mike Babad writes.
And, speaking of Mr. Buffett, Paulson also bought 6 million shares of Lubrizol Corp. . That's the company that Berkshire Hathaway is acquiring and is widely considered to have led to the controversial departure of Mr. Buffett's heir-apparent, David Sokol.
The Paulson hedge fund has said it expects to profit over the next two years from the stocks of companies going through bankruptcy, restructuring or reorganization. It also bought 31.7 million shares of Weyerhauser Co. .