David Tepper of Appaloosa Management is one of the most closely followed hedge fund managers in the world. The outspoken billionaire investor is candid when discussing his performance and his thoughts on the market, which makes him a favorite guest with CNBC and other business outlets. His stock moves, as revealed through regulatory filings with the SEC, are also closely monitored.
One of his biggest moves of the current quarter was revealed last week, when he told CNBC that he bought Snap Inc (NYSE:SNAP) when the company had its IPO a week prior. That revelation appeared to help stop the bleeding the stock was experiencing, as shares gained 6.7% last Wednesday after opening the week with heavy losses on Monday and Tuesday. During the CNBC interview, Tepper stated that he is long stocks and short bonds, and that there may not be much to prevent the current rally in the market from continuing thanks to the promise of deregulation on Wall Street. Coming from Tepper, those words have meaning, as he’s been vocally bearish about equities in the past.
Tepper’s fund returned 5% in 2016 through the end of November and its 13F portfolio contained equities worth $5.64 billion at the end of 2016, a jump from $4.40 billion a quarter earlier. In this article, we’ll take a look at five of the biggest moves made by Appaloosa Management, one of the 140 Biggest and Most Famous Activist Hedge Funds in the world, during the fourth quarter.
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David Tepper’s fund hiked its position in Facebook Inc (NASDAQ:FB) by 47% during the fourth quarter, giving it 2.18 million shares valued at $251.08 million. Tepper’s had an on-again, off-again relationship with Facebook in recent quarters, selling out of the stock during the second quarter before buying back in to it during the third quarter. Tepper reiterated during the Wednesday CNBC interview that both Facebook and Alphabet remain among his fund’s largest positions; Facebook Inc (NASDAQ:FB) ranked as the fund’s fifth-most valuable long position on December 31. Remarkably, Facebook’s user base grew faster in 2016 than it has in any year since the company’s IPO in 2012. Several analysts are overwhelmingly bullish on Facebook Inc (NASDAQ:FB), including William Blair, which thinks it can be a $200+ stock, and JPMorgan, which ranks Facebook as its top large-cap internet stock.
David Tepper’s fund went crazy on several biotech stocks in the fourth quarter, apparently hoping to take advantage of the industry’s sharp downturn in 2016 (the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) sank by 22% last year). We’ll first look at Allergan PLC Ordinary Shares (NYSE:AGN), in which Appaloosa snapped up over 3.04 million shares during the quarter, lifting its position to 4.26 million shares and making it the fund’s largest position, nearly twice as valuable as the fund’s next-largest holding. Allergan was among the biggest losers in the biotech space last year, sinking by 33%, but Tepper’s bet has thus far paid off, as things have turned around this year, with the stock posting 15% gains. Tepper did note during the CNBC interview that he sold about 20% of his Allergan position after the recent rally, though that would still leave it as his largest position (barring a big purchase of another stock).
Allergan plc Ordinary Shares (NYSE:AGN) entered into a “social contract” with patients last year, stating that it won’t hike drug prices by more than 10% annually. It lived up to its word when its new drug prices were unveiled for 2017 at the beginning of the year. CEO Brent Saunders would like to see other drug companies follow Allergan plc Ordinary Shares (NYSE:AGN)’s lead in that regard, and has also suggested that President Trump should spearhead the negotiations with drug companies on the issue of pricing.
On the next page we’ll check out three more biotech stocks that Appaloosa Management took big stakes in during the fourth quarter.