Last month, David Tepper’s Appaloosa Management LP disclosed its equity portfolio for the fourth quarter in a 13F Form filed with the U.S. Securities and Exchange Commission. According to the filing, the fund’s equity portfolio is valued at $4.05 billion and consists primarily of equities from the Consumer Discretionary, Transports, and Information Technology sectors. General Motors Company (NYSE:GM) was the firm’s largest holding with 14.68 million shares, valued at around $512.44 million at the time of the filing. David Tepper has been betting on this stock for a long time, along with HCA Holdings Inc (NYSE:HCA) and Whirlpool Corporation (NYSE:WHR), which constitute his fund’s other top long-term picks. Since Appaloosa Management has held a stake in these three companies for at least a year, we will take a closer look at the companies, and their past performance.
Last quarter, Appaloosa Management slightly reduced its stake in General Motors Company (NYSE:GM), yet the holding still accounted for 12.65% of the fund’s equity portfolio. Throughout 2014, David Tepper turned increasingly bullish on the company, as his firm increased its exposure to the stock over the course of the first three quarters of 2014. Unfortunately, the investment did not pay off last year, as the company’s share price dropped by 14.73% during 2014. Despite taking a dive in October due to the recall debacle, the stock has regained lost ground, reaching a 52-week high of $38.18 per share earlier this week.
The optimism surrounding General Motors Company (NYSE:GM) stems partially from the announced $5 billion share buyback program, which will benefit shareholders considerably. Furthermore, the company increased its quarterly dividend to $0.36 per share, making the stock even more attractive for long-term investors such as David Tepper. In addition to these favorable decisions made by management, General Motors’ is set to benefit from the expanding US economy, as well as from low oil prices that will drive car sales higher. Hence, although Appaloosa Management might not have profited from its stake in General Motors last year, 2015 is looking far better, as analysts have a median price target of $44.00 per share. Other major hedge funds seem to agree, as General Motors ranks as one of the most popular capital goods stocks among billionaire investors. Larry Robbins’ Glenview Capital, for example, holds a stake of 5.45 million shares in the company.
David Tepper’s fund also reduced its stake in HCA Holdings Inc (NYSE:HCA) last quarter to 5.01 million shares. However, the holding valued at $367.73 million as of the end of 2014, continues to represent the second-largest position in Appaloosa Management’s equity portfolio. The investment firm initiated a position in the company during the fourth quarter of 2012, when it acquired 4.32 million shares. During 2013, the stock gained an impressive 54.18% and in 2014 the share price grew by an additional 61.01%.
Clearly David Tepper knew what he was doing when he chose to invest in HCA Holdings Inc (NYSE:HCA), as the stock has not only delivered great returns in the past, but is expected to continue generating profits. While the stock is currently trading at around $72.02 per share, the average price target set forth by analysts is $85.10. Furthermore, HCA Holdings is one of the most popular healthcare stocks among billionaires, with a total of 15 major hedge funds holding a stake in the company as of the end of 2014. Stephen Mandel’s Lone Pine Capital initiated a stake with 5.84 million shares as of the end of 2014.
Finally, Whirlpool Corporation (NYSE:WHR) ranks as David Tepper’s third top pick among his long-term investments, with a position of 1.69 million shares. The fund’s stake was valued at $329.08 million by the end of the fourth quarter and accounted for 8.12% of Appaloosa Management’s equity portfolio. Whirlpool’s share price climbed by 23.43% last year, and while it is currently trading at $197.93 per share, analysts at JP Morgan recently raised the price target from $210.00 per share. Although it had a moderate start in 2014, the company beat earnings expectations for the fourth quarter by 10.3%, posting $3.52 in earnings per share. Furthermore, the consensus earnings growth for Whirlpool Corporation (NYSE:WHR) is set to be 27.4% in 2015 and 18% for 2016. Hence, David Tepper could be on to something by holding this stock as one of his top picks over the long-term, although only four other billionaire hedge fund managers agree with his assessment. Ken Griffin’s Citadel Investment Group holds a stake of 1.62 million shares, according to its last 13F filing.
Disclosure: none.
