David Tepper's Appaloosa Management Trims Financials & Airlines, Buys Blue-Chip Health Stocks (13F Filing Q1 2010) ~ market folly

Wednesday, May 19, 2010

David Tepper's Appaloosa Management Trims Financials & Airlines, Buys Blue-Chip Health Stocks (13F Filing Q1 2010)

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up in our coverage is David Tepper's hedge fund Appaloosa Management. Tepper's hedge fund focuses on companies that other people have thrown in the towel on and he takes concentrated positions in distressed debt and equity. This investment style was epitomized in the heart of the financial crisis when Tepper bought numerous financial stocks. This wager earned him billions and he gained a few spots on the Forbes billionaire list. He is from Pittsburgh and owns the NFL's Pittsburgh Steelers. While Appaloosa won big with their financials bet, they were also one of the top hedge fund losers in 2008. Needless to say, it's been a volatile past few years for Appaloosa. Previously, Tepper was a high yield bond trader for Goldman Sachs.

The positions listed below were their long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:

Brand New Positions
Pfizer (PFE)
Johnson & Johnson (JNJ)
Merck (MRK)
Valero Energy (VLO)
Yahoo (YHOO)
SuperMedia (SPMD)
Sunoco (SUN)
Tesoro (TSO)
Con-way (CNW)
YRC Worldwide (YRCW)
Continental Airlines (CAL)
Arkansas Best (ABFS)
American Commercial Lines (ACLI)

Increased Positions
Navistar International (NAV): Increased position by 293.6%
Goodyear Tire & Rubber (GT): Increased by 32.6%
Newcastle Investment Group (NCT): Increased by 17.9%
Willis Group Holdings (WSH): Increased by 15.6%
Hartford Financial (HIG): Increased by 5.4%

Reduced Positions
Office Depot (ODP): Reduced position by 81.1%
XL Capital (XL): Reduced by 73.5%
Valassis Communication (VCI): Reduced by 61%
Citigroup (C): Reduced by 54.8%
AMR Corp (AMR): Reduced by 44.04%
Delta Airlines (DAL): Reduced by 37.6%
SunTrust Banks (STI): Reduced by 35.7%
Fifth Third Bancorp (FITB): Reduced by 30.2%
E*Trade Financial (ETFC): Reduced by 28.9%
OfficeMax (OMX): Reduced by 27.6%
UAL Corp (UAUA): Reduced by 26.1%
BB&T (BBT): Reduced by 25.6%
Capital One Financial (COF): Reduced by 25.4%
CNO Financial (CNO): Reduced by 25%
Brunswick (BC): Reduced by 20.3%
Wells Fargo (WFC): Reduced by 18.5%
Microsoft (MSFT): Reduced by 18.5%
US Airways (LCC): Reduced by 13.2%
Gramercy Capital (GKK): Reduced by 11.9%
Strategic Hotels & Resorts (BEE): Reduced by 7.7%
Bank of America (BAC): Reduced by 5.9%
Maguire Properties (MPG): Reduced by 3.65%

Positions They Sold Out of Completely
Rite Aid (RAD)
Hospitality Properties Trust (HPT)

Top 15 Holdings (by percentage of assets reported on 13F filing)

1. Bank of America (BAC): 20.47%
2. Wells Fargo (WFC): 10.54%
3. Citigroup (C): 9.55%
4. Fifth Third Bancorp (FITB): 8.74%
5. Hartford Financial (HIG): 7.07%
6. SunTrust Banks (STI): 5.56%
7. Pfizer (PFE): 4.18%
8. Capital One (COF): 3.50%
9. Johnson & Johnson (JNJ): 3.13%
10. Microsoft (MSFT): 2.70%
11. Merck (MRK): 2.43%
12. Valero (VLO): 2.14%
13. Yahoo (YHOO): 1.96%
14. UAL Corp (UAUA): 1.66%
15. Willis Group Holdings (WSH): 1.64%

Back when we covered Appaloosa's fourth quarter portfolio, we noted they were buying airlines. Well, this time around they were trimming those positions. While Tepper also trimmed positions in numerous financials, they are still some of his largest holdings. The top half of his portfolio looks pretty similar to last quarter, but take note that he sold over half his Citigroup (C) position and almost a third of his Fifth Third Bancorp (FITB) stake. Despite these sales, these positions are still some of his largest. We also highlight that Appaloosa sold 30% of their SunTrust Banks position and we mention this because we just saw Warren Buffett's Berkshire Hathaway exit their STI stake completely.

Tepper also made a few notable buys in the first quarter of 2010 including Pfizer, Johnson & Johnson, and Merck. Obviously he's playing the blue-chip health theme here that we've seen so many other hedge funds flock to as many of these companies are undervalued. Just yesterday we noted David Einhorn added to his PFE position as well. Lastly, Tepper also started a new stake in SuperMedia (SPMD), a company we recently saw John Paulson start a position in as well.

Assets reported on Appaloosa's 13F filing were $2.6 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for aggregating the hedge fund portfolio movements and backtesting the performance (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, and Eddie Lampert's RBS Partners. Be sure to check back daily for new hedge fund updates.

blog comments powered by Disqus