John Paulson, who is seeking to reverse record declines in his $21 billion hedge fund, may have lost as much as $64 million on his funds’ stake in NovaGold Resources Inc. as the stock slumped after its partner in a gold venture said it won’t go ahead with the project.
NovaGold, which is 13 percent owned by Paulson’s hedge fund, sank as much as 33 percent Thursday after Barrick Gold Corp., the world’s biggest producer of the metal, said its Donlin Gold joint venture with NovaGold doesn’t meet the company’s investment criteria. Greg Lang, NovaGold’s chief executive officer, said he plans to go ahead and develop Donlin, the company’s flagship project.
Paulson, who has been buying mining companies as part of a bet on rising gold prices, has been bruised as the stocks contributed to declines in his Advantage funds and the Gold Fund this year. AngloGold Ashanti Ltd., Paulson’s third-largest U.S. stock holding as of March 31, has slumped 22 percent this year after a 14 percent loss in 2011. Paulson’s Advantage Plus fell 16 percent in the first half and his Gold Fund declined 23 percent.
Armel Leslie, a spokesman for New York-based Paulson, declined to comment.
Paulson & Co. held 36 million shares of Vancouver-based NovaGold as of April 30, according to a May 10 filing with the U.S. Securities & Exchange Commission, making it the company’s second-largest shareholder. The stock fell as much as $1.77 Thursday, translating into a $63.6 million paper loss for Paulson, assuming the hedge fund didn’t reduce or increase its stake since the last filing.
Other firms that may have been hurt by today’s decline include Seth Klarman’s Baupost Group LLC in Boston, which held 10 million shares at the end of March. Elaine Mann, a spokeswoman for the firm, declined to comment.
NovaGold fell 25 percent to $4.01 at 1:29 p.m. in New York, bringing losses since the end of April to 38 percent and valuing Paulson’s stake at $144.2 million. The stake was worth $232.7 million as of April 30.
Paulson owned 915,000 shares of Barrick as of the end of March, according to an SEC filing. Barrick fell as much as $2.80, or 8.3 percent, Thursday for a paper loss of $2.56 million.
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