Guru John Paulson (Trades, Portfolio) was born in Queens, New York in 1955. Paulson graduated with a bachelor's from New York University, then went on to attend Harvard Business School, where he earned an MBA in 1980.
After graduation, Paulson began his investment career at Boston Consulting Group where he conducted research, providing advice to companies. Paulson then worked for Odyssey Partners and then for Bear Stearns working in the mergers and acquisitions department for the company. In 1994, Paulson decided that wanted to go big with his ideas and he founded Paulson & Co. with $2 million.
Paulson & Co. is an investment management firm specializing in event-driven arbitrage strategies, including merger arbitrage, bankruptcy reorganizations, and distressed credit, structured credit, recapitalizations, restructurings, and other corporate events. Paulson and his firm rely on bottom up fundamental research where they have expertise. All of the company's strategies are based on compounding gains over the long term.
Paulson & Co. manages approximately $19.3 billion as of March 1 and employs approximately 125 employees in offices located in New York, London and Hong Kong.
In the fourth quarter of 2015, Paulson purchased 5,000,000 shares of Lam Research Corp. (LRCX, Financial).
Lam Research produces tiny, complex chips used in products such as cell phones, computing devices, and entertainment gadgets. Lam’s products play a key role in this, allowing chipmakers to build device features that are more than 1,000 times smaller than a grain of sand. In fact, nearly every leading-edge integrated circuit made today has been processed with Lam Research equipment.
Lam Research has a market cap of $11.86 billion, a P/E ratio of 15.45, an enterprise value of $8.79 billion, a P/B ratio of 2.11, and a dividend yield of 1.44.
Below is a Peter Lynch Chart for Lam Research.
Lam Research has an 8/10 Financial Strength rating according to GuruFocus, as well as a 7/10 rating for Profitability & Growth. It has an operating margin of 17.04%, higher than 85% of the 831 companies in the Global Semiconductor Equipment & Materials industry.
On Oct. 20, 2015, Lam Research announced an agreement and plan of merger and reorganization with KLA-Tencor. The deal is set to close in the second half of 2016.
KLA-Tencor Corporation is a leading provider of process control and yield management solutions, and partners with customers around the world to develop state-of-the-art inspection and metrology technologies. These technologies serve the semiconductor, LED, and other related nanoelectronics industries. The company has been in business for nearly 40 years.
KLA-Tencor Corporation has a market cap of $10.65 billion, an enterprise value of $11.56 billion, a P/B ratio of 29.22, and a P/E ratio of 20.46.
Lam Research is profitable investment for the following reasons:
- Lam Research Corp.'s book value has grown at an average rate of 16% over the previous 10 years.
- The company is trading below its intrinsic value.
- The company has over 35 years of experience.
- They have proprietary technology, and nearly every leading-edge integrated circuit made today has been processed with Lam Research equipment.
- They have a deal to take over KLA-Tencor, a company with nearly 40 years of experience in their industry. Successful gurus such as Joel Greenblatt (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Chuck Royce (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) have all been purchasing shares in the fourth quarter of 2015.
Cheers to your investment success.
