· April – A week before the Greek election put falls were at 13, almost for free, so he bought those and didn’t have a loss in the drawdown.
· Took down positions ahead of election – because people didn’t want Obama to win – and fiscal cliff.
· When the market went down, call premiums were cheap, so they bought premiums and got a little longer until the end of the year.
Tepper declined to mention specific stock names in the interview, but GuruFocus’ All-in-One Screener shows his top-returning stock positions this year: Bank of America (BAC), Masco Corporation (MAS), Huntsman Corp (HUN), Dean Foods Company (DF) and Delphi Automotive Plc (DLPH).
Bank of America (BAC)
Bank of America has gained 97% year to date, reaching a new 52-week high on Monday at $10.98 per share. Its 52-week low of $4.92 occurred in January.
David Tepper bought 47,550,000 shares to start off his Bank of America position in the first quarter of 2009, paying $7 each on average. He became a seller as the stock’s price increased to the high teens over the next several quarters, bought more on a drop, and finally eliminated the position in the third quarter of 2011.
When the price fell back down to near his original purchase price in the first quarter of 2012, he bought almost 7.5 million shares, and has been reducing the position as the price has inclined over the year.
For the third quarter ended Sept. 30, 2012, Bank of America reported net income of $340 million, or $0.00 per diluted share, a decline from $6.2 billion, or $0.56 per diluted share, in the third quarter of 2011. The quarter had several outstanding charges, including debit valuation adjustments, fair value option adjustments due to improvement in its credit spreads, litigation expenses and tax-deferred asset repricing. Excluding these items, $0.28 would have been added to its earnings per share.
Revenue also declined in the third quarter, to $20.66 billion from $28.7 billion in the third quarter of 2011.
On Monday, the bank authorized a dividend to $18.125 per share on the 7.25% perpetual non-cumulative perpetual convertible preferred stock, series L, to shareholders of record as of Jan. 1, 2013.
Masco Corp. (MAS)
Masco Corp., a home improvement and building products company, saw its stock rise 79% year to date.
Tepper bought the stock near $13 in the first half of 2011, but pulled back as the price dropped to an average of $9. In the first quarter of 2012, he bought more than 4 million shares at $12 each on average. Most recently, in the third quarter of 2012, he added another almost 1.5 million shares at $14 each on average. On Monday it opened for $16.23, a near two-year high.
For the third quarter, Masco reported net sales of $2 billion, flat compared to the third quarter of 2011. Its sales to North America increased 4%, while international sales fell 12%.
“Our top line in the third quarter benefitted from the increase in new home construction activity in North America, new product introductions, and from selling price increases,” said Masco’s CEO, Tim Wadhams. “These positives offset both the slow economic growth in North America and the continued weakening of Euro-Zone economies that we anticipated for the second half of 2012. On an adjusted basis, our margins improved on flat sales to 7.2 percent compared to 6.5 percent in third quarter 2011, driven by our focus on total cost productivity and improved price/commodity relationships. We are pleased with that outcome.”‖
Masco has a P/B of 8.47 and P/S of 0.76, which are both close to their respective three-year highs.
Huntsman Corp (HUN)
Year to date, Huntsman Corp.’s stock price has increased 63%. Huntsman manufactures organic and inorganic chemical products.
Tepper bought more than 5 million shares of the company in the first quarter of 2012 for $13 per share on average. He has since added almost 3 million additional shares at $14 per share on average. It opened for $16.22 on Monday.
In the third quarter, Hustsman reported that its net income increased to $116 million, compared to a loss of $34 million in the third quarter of 2011. Revenue declined to $2.74 million, from $2.98 million a year previously.
EBITDA of $401 million was a new quarterly record for the company. The company had a particularly strong improvement in its polyurethanes business, which more than offset a decline in its pigments business, with all of its non-pigments businesses increasing in earnings year over year.
The company is currently involved in restructuring and cost cutting effort began last year and poised to deliver a better cost structure into 2013.
Huntsman has a P/E of 7.2. Its P/B at 1.81 is close to a one-year high and P/S ratio at 0.35 is close to a one-year high.
Dean Foods Company (DF)
Dean Foods stock has advanced 48.5% year to date. Tepper began the position with 10,766,433 purchased in the fourth quarter of 2010 at an average price of $9 per share. After adding about 2.4 million shares in the first quarter of 2011, he began selling in the next quarters, mostly at higher prices. Dean Foods’ stock price opened at $16.63 on Monday.
Dean Foods is a food and beverage company that focuses on dairy and dairy-related products, along with pickles, juice and water.
For the third quarter, the company reported net sales of $3.1 billion, compared to $3.4 billion for the third quarter of 2011. The increase reflected growth in its WhiteWave Alpro, and was offset by the “pass-through of lower commodity costs at Fresh Dairy Direct and Morningstar.”
Its net income was $36.4 million, or $0.20 per share, increased from a loss of $1.54 billion, or $8.41 per share, in the third quarter of 2011.
Dean Foods has a P/E of 13.5, P/B of 54.9 and P/S of 0.2.
Delphi Automotive Plc (DLPH)
Delphi Automotive’s stock increased almost 60% year to date. Tepper has reported owning 220,466 shares of the company since the second quarter of 2012.
Delphi is one of the world’s largest vehicle components manufacturer, and began trading again at the end of 2010 after emerging from Chapter 11 bankruptcy.
Delphi’s third quarter net income was $292 million, or $0.84 per share, an increase from $285 million, or $0.79 per share in the third quarter of 2011. Net sales declined 7% to $3.67 billion, from $3.93 billion a year previously. While sales volumes were flat, the decline was a result of negative currency translation from euro- and Brazilian real-denominated sales to U.S. dollars.
“In light of the continued economic uncertainties, we initiated various restructuring programs in the fourth quarter that are intended to improve Delphi's industry leading cost structure and margins and increase shareholder value. The programs are anticipated to total approximately $250 million, with approximately 75% of the programs in Europe. Included in the total is $70 million related to MVL. Approximately $175 million of the total is anticipated to be recognized in Q4 2012, with the balance in 2013,” the company said in its 10-K.
Delphi has a P/E of 8.9, P/B of 3.8 and P/S of 0.7.
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