David Tepper’s Appaloosa Management Cuts $CVI $GT, Raises $AAPL

David Tepper is the founder of Appaloosa Management. He has become one of the world’s richest men by betting on distressed stocks (read more about David Tepper) – something he does very well. Tepper has a strong track record for spotting stocks with a lot of upside potential and the means to make it happen, making him one of the hedge fund managers we pay careful attention to.

David Tepper

Appaloosa Management’s 13F portfolio shrunk in size considerably from the end of the third quarter, when it had 50 positions collectively valued at $1.54 billion. According to a 13F filed with the SEC on February 14, Appaloosa Management had just 29 holdings, with a total value of $764.82 million, at the end of the fourth quarter. The largest of these positions was a $93.74 million holding in CVR Energy (CVI). Appaloosa had over 5.00 million shares in the company at the end of the fourth quarter. As significant as the position was at the end of December, it is significantly smaller than it was at the end of the third quarter, when Appaloosa held 6.31 million shares in the company, with a total value of $133.38 million.

CVR Energy opened trading on February 15 at $27.93 a share on a mean one-year target estimate of $30.50 a share (range $27 to $35). The upside may be conservative, but the stock is priced low at 8.31 times its forward earnings. CVR Energy is also priced low relative to its peers. Take HollyFrontier Corp (HFC) for instance. It is priced in the same ballpark, at 7.94 times its forward earnings but it has much less upside. HollyFrontier opened at $34.44 with a mean one-year target estimate of $34.92. Another positive about CVR Energy is hedge fund interest. Carl Icahn offered to buy the company for $30 per share this week. Icahn’s involvement doesn’t necessarily mean that the stock will be sold at a large premium though. His track record is mixed on this front. Last year he made a similar offer for Clorox and unsuccessfully tried to entice other buyers to bid for the company.

David Tepper was also bullish on Goodyear Tire & Rubber Co (GT). His Appaloosa Management had 6.06 million shares in the company at the end of December, for a total value of $85.83 million. It was the fund’s second largest holding. Goodyear was David Tepper’s second largest position at the end of the third quarter as well but the fund held a much larger stake then – 10.76 million shares valued at $108.59 million. Goodyear opened trading on February 15 at $13.28 a share on a one-year target estimate of $19.21 (range $15 to $22). Goodyear is priced super low relative to its future earnings, with a forward P/E of just 4.83. Carlisle Companies (CSL) is Goodyear’s closest competitor by market cap ($2.91B vs. Goodyear’s $3.20B). However, Goodyear looks to be the better bet. Carlisle opened at $47.73 a share on a one-year target estimate of $54.50 and is priced higher at 11.20 times its forward earnings.

Appaloosa Management’s third largest position at the end of the fourth quarter was in Apple (AAPL). The fund held 181,850 shares in the company, for a total value of $73.65 million. This represents a significant increase from Appaloosa’s holdings in the company at the end of the third quarter, when it had had just 38,119 shares, valued at $14.53 million. Appaloosa also held significant stakes in Dean Foods (DF), Macy’s (M), Microsoft (MSFT) and the International Paper (IP) at the end of the fourth quarter. Apple and Microsoft are two of the 5 most popular stocks among hedge fund managers for more than a year. Value investor David Einhorn’s top two positions are these two stocks. The reason is simple. These stocks are extremely undervalued, trading at around 7-8 times their forward earnings and they have huge amounts of cash on their balance sheets. They are also expected to grow their earnings between 10-20% annually. Now is the time to buy them.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!