David Tepper of Appaloosa Management expressed confidence in the market at the beginning of this year, telling CNBC that the market looked almost as cheap at the beginning of this year as it did at the beginning of last year, buoyed by corporate tax cuts. That confidence was reflected in the fourth-quarter growth spurt that Appaloosa undertook, as the billionaire investor poured money into the market, hiking the value of his hedge fund’s 13F portfolio by 50% to $10.7 billion according to the 13F that Appaloosa filed with the SEC last week.
Among the major stocks that Tepper poured money into during the previous quarter were Facebook Inc (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), T-Mobile US Inc (NYSE:TMUS), Comcast Corp. (NASDAQ:CMCSA), and MGM Resorts International (NYSE:MGM). However, of more interest to us are the moves that Tepper made in less heralded stocks, including XPO Logistics Inc (NYSE:XPO), which Tepper continued to buy heavily in the fourth-quarter after opening a small position in the stock in the third-quarter.
In this article, we’ll take a look at three of Tepper’s Q4 moves that didn’t attract much attention, but which may offer even more compelling investment opportunities than his big moves that grabbed all of the headlines.
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Summit Materials Inc (NYSE:SUM)
How Many Summit Materials Shares Tepper Owns: 2.51 million (+519,326 shares in Q4)
How Much Money Tepper Has Invested in the Stock: $78.93 million
About Summit Materials Inc (NYSE:SUM): Summit Materials is a $3.72 billion supplier of building materials for various industries. The company is lead by its Products Division, which includes the sales of Asphalt and Ready-Mix products. That division pulled in $854.5 million in revenue last year, a 20.7% year-over-year increase. Summit’s Aggregates Business overtook its Cement Business in revenue in 2017, climbing by 18.4% to $313.4 million.
Hurricane Harvey Hammers Summit Materials Inc (NYSE:SUM): Despite strong overall growth in its Products Business, organic sales volumes of the company’s ready-mix concrete declined by 2.3% in 2017, a development which was primarily blamed on Harvey as well as soft spending in Kansas. The division’s gross profit margin also declined by two percentage points last year.
Summit Materials Inc (NYSE:SUM) Buying Up Companies: Summit has already completed three acquisitions this year, spending $120 million to acquire assets in Texas, Utah, and Missouri. Summit management expressed that the company is currently conducting diligence on several other transactions, which it expects will close in the near term. Summit made 14 materials-based acquisitions in 2017.
On the next page we’ll look at two other stocks that were on the radar of the billionaire investor during the final quarter of 2017.