Though some early outside estimates had suggested that Paulson & Co. had taken a big hit on its investment in Sino-Forest Corp. , there is a report out on Friday that seems to indicate that the damage is considerably less than expected.
Early estimates ranged between $500-million (U.S.) and $720-million, after a damaging analyst's report on the company sent the shares skidding as much as 90 per cent in June. But DealBreaker reports that the actual number might be just $107-million. Paulson & Co. had been its biggest investor
That's still a lot of money, of course. But thanks to the magic of managed expectations, it might be enough to cause big sighs of relief among John Paulson's investors.
The $107-million figure is used in the headline of the DealBreaker article but isn't mentioned in the text, most of which relays Mr. Paulson's explanations for getting into the Sino-Forest debacle in the first place:
"As a passive investor in public companies, Paulson has access to the same information that everyone else in the securities market does. Like other public market investors, we must rely on audits and underwriter due diligence for comfort that financial statement and disclosures are accurate and reflect the true state of affairs at companies with publicly traded securities," the letter said (via Absolute Return + Alpha).
Next up, investors might want to hear about Mr. Paulson's views on gold. Bullion has been suffering ever since the U.S. Federal Reserve lowered its economic growth projections and said that another round of quantitative easing was not in the works, falling about $50 an ounce.
Paulson & Co. is the biggest investor in the SPDR Gold Trust exchange-traded fund, with 31.5 million units, valued at about $4.6-billion.
David Berman