David Tepper, founder of the $14 billion hedge fund Appaloosa Management, is having another remarkable year, with all five of his top five holdings having climbed by double digits, along with the 18.2% gain for the S&P 500. Tepper is renowned for his stock picking and marking reading ability. He has a 10-year cumulative return of 1,335% compared to 16.3% for the S&P 500 through 2010.
Last month, Tepper also told CNBC that he was bullish on the market going forward after the Fed decided not to taper its $85 billion monthly bond buying policy.
"The Feds non-taper and forward guidance should give a clear message of what the Fed wants. They are not worried about inflation in the next few years and want growth first, growth second, and growth third. With the stabilization of Europe, the apparent pickup in China (note higher dry bulk index) and a U.S. economy still on reasonable footing, despite a slight slowdown in housing the Feds apparent heavy leaning to a growth policy should lead to a pretty favorable environment for the markets."
But not all of Tepper’s stocks are reaching for the stars recently. In fact, there are four that have fallen very close to their 52-week low: Carnival Corporation (CCL), Transocean Ltd. (RIG) and Calumet Specialty Products Partners LP (CLMT).
Carnival Corporation (CCL)
Carnival Corporation, a 0.88% portion of Tepper’s portfolio at 1,780,049 shares, is 1.1% above its 52-week low price, with a price of $31.85 and 52-week low of $31.44.
Carnival’s stock price chart:
Tepper purchased his Carnival position in the second quarter of 2013 when the price averaged $34 per share.
The company stock price dropped as much as 13% in September when it reported its third quarter results. Carnival’s revenue increased less than 1% to $4.73 billion, and non-GAAP net income was $1.1 billion, or $1.38 per diluted share, compared to $1.2 billion, or $1.53 per diluted share, in the third quarter the previous year. The third-quarter non-GAAP earnings beat the company’s June guidance range of $1.25 to $1.33 due to lower than expected unit costs related to advertising expenses timing.
As of the end of the quarter, Carnival had lower advanced cumulative booking for the remainder of the year and first half of 2014 than the same periods last year, at the same prices. But the company maintained June guidance for non-GAAP diluted earnings per share in a range of $1.51 to $1.57. For the fourth quarter of 2013, it is expecting non-GAAP diluted earnings per share in the range of a $0.03 loss per to share to $0.03 earnings per share, down from $0.14 the previous year.
Carnival’s 10-year revenue and earnings history:
Carnival has a P/E of 16.6, P/B of 1.1 and P/S of 1.6.
Transocean Ltd. (RIG)
At 1.8% of his portfolio, Tepper holds 2,560,167 shares of Transocean. The stock is priced at $44.81, which is 2.1% above its 52-week low of $43.65. The stock is down less than 1% in the past 12 months.
Transocean’s stock price:
In the second quarter Transocean Ltd. reported $2.397 billion, up from $2.329 billion the second quarter of 2012. Net income also increased to $311 million, or $0.84 per share, from a loss of $303 million, or $0.86 per share.
Transocean 10-year revenue and earnings history:
The company has a P/E of 22.9, which is close to a two-year low. Its P/B of 1 and P/S of 1.7 are both close to their respective one-year low.
Calumet Specialty Products Partners LP (CLMT)
With 437,439 shares, Calumet constitutes 0.23% of Tepper’s portfolio, and he has been reducing the position size over multiple quarters.
Calumet shares are $27.95, which is 4.4% above their 52-week low of $26.67.
Calument’s share price:
Calumet makes high-quality, specialty hydrocarbon products used in oils, lubricants, solvents, waxes and other substances.
In the second quarter, it made $1.354 billion in revenue, a rise from $1.087 billion in the second quarter 2012. Net income declined to $7.8 million, or $0.05 per diluted unit, down from $65.7 million, or $1.14 per diluted unit.
In a statement, the company listed the following factors as negatively affecting second quarter performance: “a planned 45-day turnaround at its Superior, Wisconsin refinery; a decline in fuel products margins, compared to the prior year period; a narrowing in the discount between NYMEX West Texas Intermediate ("WTI") crude oil and other feedstocks such as Western Canadian Select ("WCS"), Bakken light crude oil and Bow River heavy crude oil; lower prices on select specialty products; and increased costs to purchase Renewable Identification Numbers ("RINs") required for compliance with the U.S. Renewable Fuels Standard.”
Calumet’s revenue and earnings history for 10-years:
Calumet has a P/B ratio of 1.5 and P/S of 0.3, which are both close to their respective one-year low. Its P/E is 13.1.
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