Appaloosa Management is an American hedge fund that was started in 1993 by David Tepper and Jack Walton. This fund specializes in distressed debt but also invests in public equity and bond markets. It is one of the most successful hedge funds giving good returns to its investors both from its equity and fixed income portfolios. David Tepper is ranked as the 35th richest person by Forbes magazine with wealth in excess of $11 billion. This top ranking fund manager has taken a cautious approach in 2016. The fund had a $4.4 billion 13F portfolio at the end of the third quarter with the financial sector accounting for the biggest position of the fund. We look at some of the top dividend yielding stocks held by Appaloosa Management during the third quarter. We believe Tepper is invested in these stocks because of their large upside potential.
We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).
Energy Transfer Partners LP (NYSE:ETP) was the 2nd largest holding of Appaloosa Management at the end of the third quarter with a 13F portfolio allocation of 9.76%. David Tepper increased his position in this stock by more than 200,000 shares leading to a total fund holding of $429.8 million. The company announced a quarterly dividend of $1.055, which implies a dividend yield of almost 12% on an annualized basis making it highly attractive for investors in a low yield world. The company has shown a trend of increasing dividends over the years, though it has been volatile over the short term. Energy Transfer Partners LP (NYSE:ETP) is a master limited partnership which is mainly engaged in the transport and storage of natural gas. Recently Sunoco Logistics Partners, L.P. (NYSE: SXL) announced a merger with this company in a $21 billion all stock deal that will create a giant network of gas pipelines in USA under the control of billionaire Kelcy Warren. As per our records 22 hedge funds held shares worth $956 million in this stock during the third quarter.