Paulson & Co Adds to Dex Media Stake, Kyle Bass Discloses His DXM Position

John Paulson's hedge fund firm Paulson & Co filed an amended 13D and a Form 4 with the SEC regarding shares of Dex Media (DXM).  Per the filings, Paulson has disclosed a 13% ownership stake in DXM with 2.23 million shares.

This marks an increase of around 19% in their position size, up from the 1.87 million shares they owned at the end of April. The new disclosure was required due to portfolio activity on May 14th.

Dex Media is the combination of the former Dex One (former ticker DEXO) and Super Media (former ticker SPMD) entities.  They recently merged and reorganized.  Paulson previously owned shares of both and as such received shares of the merged company.


Kyle Bass' Hayman Capital Discloses DXM Stake

Hedge fund Hayman Capital also owns a large stake in DXM and founder Kyle Bass presented the case on Dex Media at the recent Ira Sohn Conference.

Today we get a sense as to how big Bass' equity position is in the newly combined company. Per portfolio activity on April 30th, Bass' Hayman Capital filed a 13G with the SEC on Dex Media and revealed a 9.7% ownership stake in DXM with 1,664,636 shares.

Bass also previously held shares in both Dex One and SuperMedia and as such received shares in the newly combined entity, Dex Media.

Per Yahoo Finance, Dex Media "engages in the publication and marketing of directories, which include Yellow Pages and White Pages in the United States. The company also offers Internet-based telephone directory and database marketing services." 

Paulson & Co Discloses Position in New Dex Media Entity

John Paulson's hedge fund Paulson & Co has filed a 13D with the SEC regarding the new entity of Dex Media (DXM).  Per the filing, Paulson & Co has reported a 10.9% ownership stake with 1,878,927 shares.

Dex Media came to fruition via a merger of Dex One and SuperMedia, both positions Paulson was previously long.  As a result, they received a stake in the new entity after reorganization.

Last week, we highlighted how Hayman Capital's Kyle Bass presented the bull case on Dex Media at this year's Ira Sohn Conference.

Per Yahoo Finance, Dex Media "engages in the publication and marketing of directories, which include Yellow Pages and White Pages in the United States. The company also offers Internet-based telephone directory and database marketing services."

Kyle Bass on SuperMedia Debt & Japan

We're posting up notes from the Great Investors' Best Ideas Investment Symposium in Dallas and next up is Kyle Bass from Hayman Capital.

Bass mentioned that 90% of what he owns is in bonds (he has a ton of RMBS/subprime exposure).  He joked that he's constantly a contrarian since many other speakers at the event expressed disdain for bonds (though to be fair, the others were negative on treasuries, not RMBS).  He presented two ideas:


SuperMedia Debt

Before presenting his ideas, Bass noted that he pulled an 'audible' so this idea wasn't as in-depth.  Bass points out that bankruptcy wiped out billions for the company and that the debt trades at 66 cents while equity has fallen into obscurity.  He notes it's paying a 20% coupon and he thinks it's worth par in 2-3 years.  He also pointed out how SuperMedia is trying to merge with fellow competitor DexOne.


Bass: Don't Own Japan

Bass said that there's 80-200 trillion in global debt. In 18 months Japan will structurally fall apart.  "There's no chance at Japan repaying their debt."

He says psychology is important so look at anchoring bias.  It's important to think about how others think about debt.  Japan's debt to GDP is the worst in the world.  Their debt is 25x their revenues.  (David Einhorn was checking out Bass' slideshow).


Bass said there's 3 axioms that are actually false:

1. Positive current surplus, Japan not self-funding:  This is flat false he says.

2. Bank of Japan not monetizing the debt: Bass says they're already buying 2/3rds of the bonds today.

3. Retail investors will always support JGB's: Bass says Japan has a secular population decline.


We highlighted how in the past Bass has said that Japan would be selling more adult diapers than kids' ones and that's now the case.  He also pointed out how the country is having "adult diaper fashion shows."

He also illustrated how Japan is trying to sell JGB's by showing advertisements of a schoolgirl band selling them and sumo wrestlers pitching JGBs.

Touching on the Softbank/Sprint deal since it was mentioned earlier in the panel by Lee Cooperman, Bass noted that Softbank paying 20 billion yen to buy broken telecom is Softbank exporting yen as investors are starting to flee the currency.

Bass says that Japan has one of the "largest structural fiscal deficits in the world."  He doesn't know when exactly this collapse happens as this could go on for a few years?  He notes the timing on this sort of thing is very hard to peg, but it will "absolutely happen."

He wrapped up talking about playing options on this scenario because if it happens, you get paid a ton.  But in the mean time while you wait for it to happen, you only lose a little (we assume he's referring to price put options on Japanese JGBs, a trade he's talked about in the past).  For more on this manager, we've also recently posted up Bass on Europe and how he's investing.


For the rest of the presentations, head to notes from the Great Investors' Best Ideas conference.

John Paulson Discloses SuperMedia (SPMD) Position

John Paulson's hedge fund firm Paulson & Co has just filed a 13D with the SEC and has disclosed a 17.4% ownership stake in SuperMedia (SPMD). The filing was made due to activity on December 31st, 2009 and they now own 2,607,506 shares. This is a newly disclosed stake for them as they did not show share ownership of SPMD when we previously looked at Paulson's portfolio. SuperMedia is the new name for Idearc, who recently emerged from bankruptcy.

Their position in SuperMedia does require some explanation as they didn't just solely purchase shares. Taken direct from the SEC filing, we see that "A total of $12,117,456 was paid to acquire shares pursuant to the Standby Purchase Agreement. Additionally, the Reporting Persons (Paulson) paid a total of $455,895,831 for debt securities of the Issuer (SPMD) that was exchanged for cash, new debt securities of the Issuer and shares of Common Stock pursuant to the First Amended Joint Plan of Reorganization with the United States Bankruptcy Court."

So, we now see that back on November 18th, 2009 Paulson entered into a Standby Purchase Agreement. Paulson also entered into a Standstill Agreement whereby he can nominate one board director as long as his firm owns at least 20% of the outstanding shares. Paulson's potential ownership of common stock has also been limited to 45% of the outstanding shares and this agreement has a four year term.

Of the 2,607,506 shares Paulson owns, 4.7% of those are common shares purchased under the Standby Purchase Agreement and 12.7% of those shares were acquired upon the exchange of debt securities pursuant to the Plan. Got all that? For more information on Idearc's emergence from bankruptcy as the new SuperMedia, head to this press release.

This latest portfolio movement comes amongst the recent fanfare surrounding John Paulson's new gold fund which we covered extensively. Paulson of course has gained notoriety for his huge bet against subprime over the past few years where he made billions. Wall Street Journal columnist Gregory Zuckerman has detailed Paulson's amazing play in his new book The Greatest Trade Ever (see our review here).

Other recent portfolio activity out of hedge fund Paulson & Co includes doubling down on their Cadbury stake (CBY) and taking a position in Conseco (CNO). For more insight from Paulson, check out their third quarter investor letter. Lastly, you can also view the rest of John Paulson's equity holdings here.

Taken from Google Finance, SuperMedia (formerly Idearc Inc.) "serves as the advertising agency for small-to-medium sized businesses with a variety of advertising solutions."