David Tepper’s Key Moves from Q4: Microsoft Corporation (MSFT), SanDisk Corporation (SNDK)

Page 1 of 2

In the hedge fund universe, 13F filing season is in full bloom, and while these positions are reported to the SEC with a 45-day delay, this actually improves investors’ ability to beat the market because, on average, fund managers are early into their investments. Our research has shown that hedge funds’ consensus stock picks beat the market handily, and ($BHFI quote)the MarketWatch Insider Monkey Billionaire Hedge Fund Index is a perfect example of this phenomenon. In 2012, this index returned 24.3%, beating the S&P 500 ETF by 8 percentage points (see the details of our market-beating strategy).

David Tepper, the manager of Appaloosa Management, is one of the most prophetic hedgies out there; he oversees close to $16 billion in assets and returned 25% last year after fees (YTD through Dec. 17th). The fact that Carnegie Mellon’s business school was named after Tepper by the age of 55 only adds to the hedge fund manager’s allure. Late last year, he said equity markets have “a lot” of upside in 2013 (see the full prediction), so let’s see how he’s playing them.

Confidence in Delphi, Microsoft

In the fourth quarter, Tepper upped his stake in Microsoft Corporation (NASDAQ:MSFT) and Delphi Automotive PLC (NYSE:DLPH) by 179.1% and 301.6% respectively. These moves accounted for the two largest increases in Appaloosa’s equity portfolio over this period, from the previous quarter. Mr. Market has been far kinder to Delphi than it has Microsoft since the start of Q4, but both are up around 4%-5% in 2013 thus far. Though they operate in vastly different sectors, both companies beat Wall Street’s earnings estimates last quarter, and each trades below 9 times forward earnings.

In comparison to industry averages, MSFT shares are far cheaper than Delphi, and analysts’ average price target on theAPPALOOSA MANAGEMENT LP tech giant represents an upside of about 18%—twice what’s expected of the auto parts maker. Microsoft Corporation (NASDAQ:MSFT) is also one of only eight S&P 500-listed large-caps operating in the tech sector to pay a dividend yield of at least 3%, while Delphi doesn’t offer a payout for income-seekers. Still, Tepper’s vote of confidence in both stocks should not be taken lightly.

Computer storage

Two companies with heavy involvement in the computer storage space, EMC Corporation (NYSE:EMC) and SanDisk Corporation (NASDAQ:SNDK), were big bets for Tepper and Appaloosa last quarter. The hedge fund upped its stake in each stock by more than 45% from Q3 levels, though SanDisk has been a far better investment year-to-date, returning 15% versus EMC’s loss of 5%. Both companies issued fourth quarter earnings beats, though SanDisk—the smaller company by market cap—offers better growth prospects moving forward.

What does the sell-side predict?

Page 1 of 2
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

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

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!