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Preferred Stocks in David Tepper’s Portfolio: AIG, Royal Bank of Scotland, and Wells Fargo Preferred

January 14, 2011 | About:

Investment Guru of the Year 2010 David Tepper made the most of his fortune by investing in debt and preferred in distressed situations. He made $7.5 billion in 2009 for his fund and returned 132 percent in that year. But the performance is not unusual: Tepper returned an average north of 40% in the past 17 years.

David Tepper invested heavily in preferred stocks, when those were sold at a few bucks a share with a par value of $25. You can see some of his commentaries from this interview:

We looked into the preferred stocks that David Tepper owns, we still find some that are traded far below the par value, and David Tepper were still adding to the positions. These preferred are from AIG, Royal Bank of Scotland, and Wells Fargo.

No. 1: AMERICAN INTERNATIONAL GROUP INC. Preferred (AIG.PA), Weightings: 1.39% - 5,419,560 Shares

AIG raised money from the government and through preferred. Amer Intl Grp has a market cap of $7.56 billion; its shares were traded at around $54 with and P/S ratio of 0.1.

This is the holding history of David Tepper with AIG.PA.

AIG.PA is sold at $6.73, only about 26% of the par value.

No. 2: ROYAL BANK SCOTLND F (RBS.PF), Weightings: 0.04% - 53,587 Shares

The Royal Bank of Scotland Group plc is the holding company of one of the world's largest banking and financial services groups, with a market capitalisation of ?62. Royal Bk Sc-adr has a market cap of $39.1 billion; its shares were traded at around $13.61 with and P/S ratio of 0.4.

David Tepper owns many types of RBS preferred. They are in this table:

Ticker Price ($) Shares Value ($1000) % Weighting as of 2010-09-30 Share # Change from Last Period
RBS.PF 22.04 53,587 1,283 0.04% 0
RBS.PH 20.8 88,752 2,096 0.06% 0
RBS.PL 17.4 1,861,961 35,806 1.07% +8.76%
RBS.PM 15.46 1,560,596 24,174 0.72% +7.18%
RBS.PN 15.4 3,360,579 52,123 1.55% +8.15%
RBS.PP 15.37 2,400 37<0.01% New Buy
RBS.PQ 16.01 1,609,519 26,106 0.78% +0.13%
RBS.PR 15.47 4,889 75<0.01% New Buy
RBS.PS 15.75 2,005,614 31,689 0.95% +0.12%
RBS.PT 16.92 2,023,314 33,971 1.01% +0.81%
We only list the holding history of two RBS preferred here. You can go to his portfolio for details.

No. 3: WELLS FARGO PFD L (WFC.PL), Weightings: 8.76% - 292,019 Shares

Wells Fargo & Company is a diversified financial services company providing banking, insurance, investments, mortgage and consumer finance services through stores, its Internet site and other distribution channels across North America as well as internationally. Wells Fargo-new has a market cap of $172.44 billion; its shares were traded at around $32.75 with a P/E ratio of 19 and P/S ratio of 1.7. The dividend yield of Wells Fargo-new stocks is 0.6%. Wells Fargo-new had an annual average earning growth of 5.1% over the past 10 years.

For a list of all the preferred owned by gurus, go to Guru referred Stocks.

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 2.7/5 (9 votes)


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