The New Jersey-based hedge fund Appaloosa Management LP, led by David Tepper, has disclosed an equity portfolio valued at $2.86 billion as of the end of the third quarter of 2015. The equity portfolio is mainly invested in Consumer Discretionary stocks (32%), Transports (17%) and Technology (15%) stocks. The fund’s last 13F filing showed that the fund also raised its exposure in industrials stocks.
The top three picks in the industrials sector at the end of the quarter were Delta Air Lines Inc. (DAL, Financial), Owens Corning (OC, Financial) and JetBlue Airways Corporation (JBLU, Financial). The stocks comprised 9.5%, 4.9% and 4% of the total portfolio.
The fund holds 6.08 million shares in Delta Air Lines, up by 43% on the quarter. The value of the stake amounts to $272.7 million.
In the first days of November, shares of the company broke the 52-week high, but after the tragic events in Paris, the stock began a downward trend. Although the stock lost 4% on a year-to-date basis, the stock gained 11.4% in the reported quarter.
Delta is still poised for excellent growth. JPMorgan Chase & Co. (JPM, Financial) has boosted the firm's target price to $74.50 from $63. Considering the actual price, the upside potential is about 57%.
As mentioned, the stock is trading lower after reaching a 52-week high, and is currently a nice bet. It trades at 13.74 times last year's earnings, while the forward P/E is 8.5. Further, the PEG ratio is ranked higher than 71% of the 24 companies in the Global Airlines industry.
Tepper reduced his holding inOwens Corning by 7%, though the company is still the second largest holding in the industrial sector. Despite this bearish sentiment, the stock had a return of 1.1% in the third quarter.
Richard Pzena was also bearish, reducing his stake by 39% to 717,291 shares durign the third quarter.
The fund held about 4.95 million shares in JetBlue Airways valued at $115.83 million at the end of the third quarter of 2015. With a market cap of $8.02 billion, the stock was up by 35.5% during the quarter, and Tepper reduced the fund's exposure by 10%. The stock’s total returns are at 81.1% year-to-date. According to Yahoo! Finance, the company has a price target of $29.29. Considering the actual trading price, the upside potential is 18%.
Jim Simons (Trades, Portfolio) holds a stake of 3.73 million shares in JetBlue valued at $96.17 million, after increasing the stake by 36% in the reported quarter.
Disclosure: As of this writing, Omar Venerio did not hold a position in any of the aforementioned stocks.
