David Tepper (Trades, Portfolio), founder of Appaloosa Management, disclosed this week that his firm's top trades during the third quarter featured a massive expansion of its holding in PG&E Corp. (PCG, Financial) and sells in several retail and technology giants, including Alibaba Group Holding Ltd. (BABA, Financial), Amazon.com Inc. (AMZN, Financial), Alphabet Inc. (GOOG, Financial)(GOOGL) and Facebook Inc. (FB, Financial).
A distressed-debt specialist, Tepper's interest in the stock market was kindled by watching his father trade stocks. The Appaloosa leader has earned an international reputation for producing some of the highest returns among fund managers on Wall Street.
Tepper announced in 2019 that he was converting his hedge fund into a family office now that he also manages the Carolina Panthers NFL football team. As of third quarter-end, Appaloosa's $5.66 billion equity portfolio contained 32 stocks, with one new position and a turnover ratio of 15%. The top three sectors in terms of weight are communication services, consumer cyclical and technology, representing 34.50%, 20.13% and 15.56% of the equity portfolio.
PG&E
Tepper purchased 71,831,398 shares of PG&E, increasing the stake 803.15%. The shares, which received an 11.93% equity portfolio weight, propelled PG&E into the firm's top holding with a total weight of 13.41%.
The San Francisco-based utility company provides electricity and gas services to residents in Central and Northern California. PG&E operated under bankruptcy court protection between January 2019 and June 2020.
GuruFocus ranks PG&E's financial strength 3 out of 10 on several warning signs, which include a weak Piotroski F-score of 2 and interest coverage and debt ratios that are underperforming over 82% of global competitors.
Other gurus with holdings in PG&E include Daniel Loeb (Trades, Portfolio), Seth Klarman (Trades, Portfolio) and David Abrams (Trades, Portfolio).
Alibaba
Tepper sold 1.155 million shares of Alibaba, trimming the position 34.22% and the equity portfolio 4.33%. Shares averaged $263.14 during the third quarter.
GuruFocus ranks the Chinese e-commerce giant's financial strength and profitability 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 7.6, consistent revenue growth and an operating margin that outperforms over 93% of global competitors.
Amazon
Tepper sold 83,500 shares of Amazon.com, trimming the position 37.11% and the equity portfolio 4%. Shares averaged $3,151.21 during the third quarter.
GuruFocus ranks the Seattle-based e-commerce giant's financial strength and profitability 7 out of 10 on the back of a strong Altman Z-score of 6.49 and an operating margin that outperforms 68.77% of global competitors.
Google and Facebook
Tepper sold 76,500 Class C shares of Google and 465,500 shares of Facebook, trimming the equity portfolio 3.72% in the aggregate.
Disclosure: No positions.
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