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David Tepper's Biggest-Winning Stocks

June 17, 2013 | About:

Holly LaFon

255 followers
Appaloosa hedge fund manager David Tepper is known for outsized returns and good timing on his purchases, earning much of his wealth foreseeing and correctly playing the housing crisis and subsequent financial recovery.

In his last television appearance, on May 14, Tepper was sanguine on a potential Fed taper of quantitative easing policy, and said he had a positive outlook for the economy:

“It's so overwhelming. The economy is getting better, autos are better, housing's better, it continues to improve, they can't find enough people to work in housing, that's the only thing holding it back right now.”

GuruFocus’ feature, the All-in-One Screener, shows which stocks of Tepper’s have paid off the most since he purchased. If the screener is set to “David Tepper,” and the “Price change since guru buy/sell” fields are set from 50% to 100%, the following companies result: Citigroup Inc. (C), Ford Motor Corp. (F), Hartford Financial Services Group Inc. (HIG) and JPMorgan Chase & Co. (JPM).

Citigroup Inc. (C)

Average gain since purchase: 56%

Tepper amassed 10,194,547 shares of Citigroup over the first three quarters of 2012, a holding worth 8% of his portfolio. In the last year, the company’s shares saw a dramatic 74% rise to $49.36 per share Monday.

The company’s revenue has been in decline for the past two years, while earnings also declined last year:

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The Peter Lynch chart shows that Tepper bought it when it was undervalued, but the stock now appears to be overvalued:

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Guru Diamond Hill Capital had this to say about Citigroup in its third quarter 2012 Large Cap Fund commentary:

“We also initiated a position in banking and financial services company Citigroup, Inc. (C) as we gained confidence in the company's financial condition. Citigroup has addressed credit quality and weak capital issues, which should allow it to rapidly wind down its troubled asset portfolio. We also expect Citigroup to re-establish its capital return program through dividend increases and share repurchases which should benefit shareholders.”

The bank has a P/E of 18.5, P/B of 0.80 and P/S of 2.10.

Ford Motor Company (F)

Average gain since purchase: 36%

Tepper purchased 11,719,973 shares from the first quarter of 2012 through the first quarter of 2013. The holding equates to 3.3% of his portfolio.

Ford, the car and truck maker with a $61.13 billion market cap, has seen its stock rise 50% in the last year.

Ford’s revenue began to improve in 2010, after several years of declines, and earnings rose from 2009 to 2012. Tepper began to purchase the stock when its P/E dropped to multi-year lows in 2012:

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Ford’s stock price has been boosted recently by the strength of its highest North American profit in more than a decade reported in the first quarter, and net income of $1.6 billion, up $215 million from the previous year. Revenue also increased to $35.8 billion from $32.4 billion the previous year, while revenue declined in Europe and South America. The company paid $400 million in dividends in the quarter.

The Peter Lynch chart shows Ford as still undervalued:

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Ford has a P/E of 10.6, P/B of 3.8 and P/S of 0.50.

Hartford Financial Services Group Inc. (HIG)

Tepper’s average gain since purchasing: 50%

He bought 5,304,500 shares of Hartford Financial beginning in the first quarter 2012 up to the most recent quarter. Shares of the company have increased 75% in the last year to trade for $29.72 on Monday.

Hartford Financial is an insurance and financial services company with a $13.57 billion market cap.

Hartford’s 10-year price, revenue, net income and P/E history:

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In the first quarter of 2013, Hartford recorded a $241 million net loss, compared to $96 million in net income the previous year, due to a $541 million charge for hedging activities related to its Japan variable annuity block, as well as a $138 million after tax loss on debt extinguishment. Core earnings grew 19%.

Hartford has a P/B of 0.6 and P/S of 0.5.

JPMorgan Chase & Co. (JPM)

Average gain on purchases: 43%

David Tepper purchased 2,397,178 shares of this financial in the third quarter of 2012 and has since reduced the position to 1 million shares. JPMorgan shares gained 54% over the past year, to trade for $53.85 per share Monday, near a 10-year high.

JPMorgan, the financial holding company, has a market cap of $203.58 billion.

The company’s earnings have been improving since the financial crisis, while revenue has wavered:

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JPMorgan’s earnings in the first quarter of 2013 reached a record $6.5 billion, and revenue was $25.8 billion, down from $26.8 billion the previous year. Return on common equity also widened to 17%, from 15% the previous year. In the first quarter, the board announced a dividend increase to $0.38 per share, from $0.30 per share, bringing it up to its highest level.

The company has a P/E of 9.6, P/B of 1.1 and P/S of 2.2.

See more of David Tepper’s top-gaining stocks at the All-in-One screener here.

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Rating: 3.6/5 (9 votes)

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