Hedge fund firm Paulson & Co has doubled down on its bet on the U.K. confectioner Cadbury Plc (CBY).
According to a regulatory filing, John Paulson’s hedge fund, which earned $15 billions in a single year by betting against the U.S.housing market, increased its bet on Cadbury on the same day Kraft Foods Inc. (KFT) launched a £9.8 billion ($16.4 billion) hostile bid for the British candy maker.
The New York-based hedge fund now owns 28.5 million shares, or 2.08%, of Cadbury after buying 14.8 million shares at 759.59 pence. That implies a price of 112 million pounds ($187 million) for yesterday’s purchase. The price paid was slightly below Cadbury’s closing price Monday of 761, the British regulatory filing shows.
Many analysts think a likely pps of at least 800 pence is necessary and that an offer of 850 pence would be more likely to seal a deal.
Paulson & Co.’s founder, John Paulson, who went in a span of just three years (2005-2008) from unknown to unparalleled, ranks as one of the $1.5 trillion hedge fund industry’s best traders. He cemented his reputation by defying conventional wisdom with bets U.S. housing prices could fall on a national scale. With that bet, Paulson became the industry’s highest-paid manager, earning more than $3 billion in 2007. His savvy approach to trading during the credit crisis earned him a place alongside George Soros and Warren Buffett as an oracle of investing.
The Cadbury move by Mr. Paulson comes amid increased hedge fund interest in the British candy maker. Eton Park Capital, for example, now holds a 2.4% stake in the co. Franklin Resources Inc., which has become the largest Cadbury shareholder since Kraft disclosed its approach, continued to build its stake according to Bloomberg, at levels above 790 pence.
Cadbury’s shares, closed up 0.3% at 763 pence today.
Leave a Reply