David Tepper‘s Appaloosa Management has recently submitted its 13F filing with SEC, and it is anything but usual. It seems that the fund is either treating all US based investments as toxic, or has found much better investing opportunities elsewhere in the world. Tepper has closed positions in the stocks of several major U.S-based companies including Apple Inc. (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB), Citigroup Inc (NYSE:C), CBS Corporation (NYSE:CBS), and Halliburton Company (NYSE:HAL), some of which are favorite picks of other hedge fund managers. Even more surprising is the fact that Tepper had categorically expressed his faith in US securities in an October interview with Bloomberg, and then again in December on CNBC.
Owing to David Tepper’s long list of accomplishments, he is a man who should be taken seriously, which adds even more mystery to Appaloosa’s latest moves. After all, Carnegie Mellon named its business school after him. Founded in 1993, David Tepper’s Appaloosa Management has regulatory assets worth about $23.52 billion under its management. As far as Tepper’s stock picking ability is concerned, he is renowned for picking up financial stocks in 2009, just before the end of the bear market. He made $4 billion during that year.
The last quarter was anything but a reminder of the above-mentioned achievements as the market value of Appaloosa Management’s equity portfolio dipped from $6.79 billion to $4.05 billion, a decrease of nearly 40%. The new strategy has led to complete liquidation of the fund’s Apple Inc. (NASDAQ:AAPL) holding, which earlier comprised 1.72% of the portfolio’s value.
The iPhone manufacturer is a top pick for many hedge fund managers including Ray Dalio of Bridgewater Associates, which continues to own more than 259,497 common shares of the tech giant, according to his latest 13F filing with SEC. Carl Icahn of Icahn Capital has been another longstanding champion of the company and his stake exceeded $5.82 billion in value, as of the end of 2014. The stock is up more than 16% since the beginning of this year however, making the value even more immense.
The largest position closed by Tepper, according to its percentage value of his portfolio was Citigroup Inc (NYSE:C). The financial services holding company formed 6.35% of the portfolio value before its shares were completely slashed. On the other hand, Dan Loeb of Third Point initiated a new position for the same stock to the tune of 5.0 million shares.
Considering Citigroup Inc (NYSE:C)’s performance during this year, Tepper made a wise decision. The stock is down about 4.6% year-to-date. Legal fees and repositioning charges have weighed heavily on the company’s earnings for the last quarter. Citigroup reported earnings per share (EPS) of $0.06 for the last quarter.
Facebook Inc (NASDAQ:FB), which had previously held a spot worth 4.18% in terms of the value percentage in Appaloosa Management’s portfolio, was also completely wiped off the hedge fund’s sheets. Despite reporting revenue figures which were in line with the estimates, and an EPS beat of $0.06, which put the social media platform’s earnings figure at $0.54, Facebook hasn’t fared so well this year. The stock is down about 2.27%.
As far as Appaloosa’s investments in the energy sector are concerned, Tepper may have been a little too quick to jump the ship owing to fears of a plummeting oil price. Halliburton Company (NYSE:HAL) lost its place in the fund’s portfolio, which had earlier formed about 4.78% of its value.
The oilfield services company is up nearly 13.7% year to date and might even add substantially to this as oil prices continue to recover from low levels (although this is not a given, and some reports have suggested they could go as low as $20 per barrel). This is of course in addition to the Baker Hughes deal which will enable Halliburton Company (NYSE:HAL) to realize significant cost and revenue synergies, besides becoming a behemoth in the sector. The merger is set to be finalized in the latter half of 2015, and is still subject to approval from shareholders and regulators.
CBS Corporation (NYSE:CBS)’s portfolio share was also cut to zero from 2.25% a quarter earlier. This media company is another story of lost returns for Tepper. The stock has gained nearly 8.34% since the beginning of this year. The company reported record fourth quarter revenues last week of $3.68 billion.
