David Tepper (Trades, Portfolio), founder of New Jersey-based Appaloosa Management, the third most profitable hedge fund according to PVH Investments, disclosed the 10 stocks in which he took a position in the first quarter as well as 14 he dumped.
One of his most notable changes was his acquisition of a stake in Facebook Inc. (FB, Financial), his largest new buy at a total cost around $185.8 million. Tepper purchased 1,627,950 shares of the social media company, whose price per share averaged $105 during the quarter. He had taken a larger position in the company in 2014 but later sold out in the fourth quarter.
As his fourth largest purchase, Tepper bought 6.99 million shares of Bank of America (BAC, Financial), a $94.5 million stake worth 1.67% of his long portfolio. Tepper has moved in and out of Bank of America over the years, most recently selling a stake in the third quarter 2015. The bank’s average price per share during the quarter was $15.
Tepper pocketed his biggest gain on Bank of America when he bet on troubled financials in 2009 and bought shares around $4 each. Since the low point the bank’s stock price garnered a 125% gain.
Tepper also bought a stake in Valeant Pharmaceuticals International Inc. (VRX, Financial), the pharmaceutical company that grew astronomically by raising the prices of drugs it acquired but whose stock plunged in recent months. His holding consisted of 945,000 shares but various news reports have said that he already dropped it.
In sells, Tepper exited his entire holding of Apple (AAPL, Financial), which less than a year ago was his third biggest. The move was likely unprofitable, since his average buy price was $128 in the second quarter and its first quarter average price had tumbled to $100.
Fourteen other stocks were also eliminated from the portfolio, including an oil and gas exploration and production company EQT Corp. (EQT, Financial), mining and metals company Freeport-McMoRan Inc. (EXP, Financial) and airline United Continental Holdings (UAL, Financial).
From a broader perspective, Tepper cut back his holdings in economically sensitive consumer cyclical stocks for the third consecutive quarter, to 6% from 36%. Energy stocks also shot up to 18% of the portfolio from 10% in the fourth quarter and zero before that since the fourth quarter 2014.
Tepper’s most significant activity in the oil and gas space was to increase by 458% his holding in Williams Partners LP (WPZ, Financial) to 4.8% of the portfolio, and growing by 214% his position in Energy Transfer Partners LP (ETP, Financial) to 9.2% of the portfolio. That company became second in his portfolio only to his call options on the S&P 500 index, which occupies 9.8%.
See Tepper’s portfolio here. Start a free 7-day trial of Premium Membership to GuruFocus.
