Hedger Paulson Betting on Oil, Natural Gas

Date: Thursday, October 30, 2008
Author: Kaja Whitehouse, The New York Post

Hedge fund superstar John Paulson seems to be building his stake in beaten-down energy companies.

Paulson's firm raised its position in Cheniere Energy, which develops liquefied natural gas terminals, by 2.7 million shares recently, according to a filing with the Securities and Exchange Commission. This makes the hedge fund mogul the second-largest owner with a stake of 14.6 percent.

Whether Paulson sees good things for energy stocks or just sees a cheap stock is unclear. He didn't return a request for comment and has been super-secretive about his strategy.

Paulson, who runs the $35 billion Paulson & Co., became famous for pocketing as much as $3 billion last year on bets against subprime mortgages. Now he's being glorified further for keeping it up even as the industry founders.

So far this year, his six funds are posting returns of between 5 percent and 25 percent.

Sources tell The Post, Paulson's largely avoided the energy trades that hurt so many of his peers when oil prices whipsawed from $150 a barrel to close to $60 in a matter of months. He's also been shorting banking stocks.

His latest filings with the SEC suggest that despite avoiding oil bets, he sees opportunity in energy stocks.

His quarterly stock ownership filing with the SEC in August showed his firm added two new energy stocks to the portfolio, including his first bets in Cheniere Energy.

At the time, he already owned shares of offshore drilling company Hercules Offshore and electricity company Mirant. In addition to buying 4.7 million shares of Cheniere, he purchased 1.9 million shares of W-H Energy Services, which provides drilling products and services.

It could also be a simple value play. Cheniere's stock has fallen to all-time lows, hitting 95 cents a share earlier this month, down from close to $42 a share late last year.