New Jersey-based David Tepper‘s Appaloosa Management LP recently submitted its latest 13F filing with the SEC, revealing a 75% quarter-over-quarter rise in the value of its equity portfolio, to over $5 billion at the end of December. That increase was only partially due to the fund’s performance during the quarter. Appaloosa’s 29 long positions in stocks with market caps of more than $1 billion delivered weighted average returns of 4.08% during the fourth quarter, based on the size of those positions on September 30. That was the best quarterly performance of the year for Tepper according to that metric, and pushed his year-to-date losses down to 2.70%.
Founded by billionaire David Tepper and Jack Walton in 1993, Appaloosa Management LP is widely regarded as one of the pioneers of distressed debt investing on the Street. Although the fund continues to invest a large chunk of its assets under management (AUM) in distressed debt, over the last few years it has increased its exposure to equities; its latest 13F filing being a testament to that. According to the filing, 26 of the 52 equity holdings held by Appaloosa Management LP at the end of December were new purchases made during the fourth quarter. In this article we are going to focus on the top five of those 26 stocks.
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#5 Pfizer Inc. (NYSE:PFE)
– Shares Owned by Appaloosa Management LP (as of December 31): 2.41 million
– Value of Holding (as of December 31): $77.87 million
The 9.05% year-to-date decline in Pfizer Inc. (NYSE:PFE)’s stock might be causing some agony to existing investors, but it has also pushed the stock’s annual dividend yield above the 4% mark and made it attractive for fixed-income investors. The company has been constantly in the news since it announced last November that it will merge with Allergan PLC (NYSE:AGN) in a $160 billion deal. Regulators and lawmakers have criticized the merger, which incidentally is the biggest ‘tax inversion’ deal of all-time, on the grounds that it will pave the way for many more companies to migrate abroad for tax saving purposes. However, analysts feel the deal is hugely beneficial for Pfizer Inc. (NYSE:PFE). On February 9, Colin Bristow, released a note to its investors in which highlighted how this merger will add $4.00 per share to Pfizer’s net present value (NPV) and be 17% accretive in 2019. Bristow currently has a ‘Buy’ rating on the stock with a $39 price target on it on a stand-alone basis and a $43 price target on it as a merged entity. Billionaire Ken Fisher‘s Fisher Asset Management increased its stake in Pfizer by 1% to 32.33 million shares during the fourth quarter.
#4 TerraForm Power Inc (NASDAQ:TERP)
– Shares Owned by Appaloosa Management LP (as of December 31): 7.6 million
– Value of Holding (as of December 31): $95.6 million
There seems to be no respite for any company attached with SunEdison (NYSE:SUNE) in the last few months, including TerraForm Power Inc (NASDAQ:TERP). Shares of TerraForm Power Inc (NASDAQ:TERP) fell by 60% during the second-half of 2015 and are again trading down so far this year, by 37.5%, on the back of the financial difficulties faced by the company. After initiating his stake in the company in the fourth quarter, Mr. Tepper sent a letter to TerraForm Power’s board in December asking it to reveal all documents pertaining to SunEdison (NYSE:SUNE)’s $2.2 billion bid for Vivint Solar Inc (NYSE:VSLR). According to Mr. Tepper, SunEdison (NYSE:SUNE) cheated TerraForm Power’s shareholders by selling inferior assets to TerraForm Power for $922 million to raise capital for its Vivint Solar Inc (NYSE:VSLR) acquisition. On January 19, analysts at Bank of America downgraded TerraForm Power’s stock to ‘Neutral’ from ‘Buy’, while maintaining their price target on it at $11. Frank Brosens‘ Taconic Capital sold its entire stake of 1.8 million shares of TerraForm Power during the October-to-December period.