BOSTON (TheStreet) -- Billionaire hedge-fund managers David Tepper and John Paulson shared a small-cap insurance bet in the fourth quarter.
CNO UPPaulson earned almost $10 billion for himself over the past three years, in large part, by selling short subprime mortgage securities. Tepper's four portfolios, run from Appaloosa Management's offices in Chatham, N.J., doubled last year, helped by timely wagers on financial-services firms.
Tepper boosted his Conseco(CNO) position by 39% to 2.2 million shares in the latest quarter, and Paulson multiplied his wager eight-fold to 24 million shares through a private placement, according to Securities and Exchange Commission filings. Paulson's new shares cost him $78 million, accounting for 8.9% of shares outstanding. As it's difficult to unload 24 million shares in a pinch, it's safe to assume that Conseco is a long-term holding of Paulson's New York-based Paulson & Co.
The once-beleaguered insurer, based in Carmel, Ind., mounted a turnaround in 2009. Conseco swung to a third-quarter profit of $15 million, or 8 cents a share, from a loss of $183 million, or 14 cents, a year earlier. Revenue increased 9.5% to $1.1 billion, and the operating margin stretched from 3% to 8.6%. This performance marked the third-consecutive quarterly profit for Conseco, which suffered an accumulated loss of $2.21 a share in 2008.