David Tepper (Trades, Portfolio), founder of Appaloosa Management, disclosed this week that his firm's top six trades during the fourth quarter of 2020 included position reductions in PG&E Corp. (PCG, Financial) and Micron Technology Inc. (MU, Financial), the closure of its AT&T Inc. (T, Financial) holding, new holdings in Occidental Petroleum Corp. (OXY, Financial) and the Energy Select Sector SPDR Fund (XLE, Financial) and a position boost in Amazon.com Inc. (AMZN, Financial).
Tepper, who specializes in distressed-debt investing, became interested in stocks by watching his father trade equities as a child. The guru is now among a group of Wall Street fund managers with high returns.
The Appaloosa president announced in 2019 that he eventually plans to convert his hedge fund into a family office. As of the fourth quarter-end, Appaloosa's $6.69 billion equity portfolio contains 45 stocks, with 16 new positions and a turnover ratio of 20%. The top three sectors in terms of weight are communication services, consumer cyclical and technology, representing 31.67%, 20.28% and 16.11% of the equity portfolio.
PG&E
Having purchased over 71 million shares of PG&E (PCG, Financial) during the third quarter of 2020, Tepper sold 38,404,740 shares of the San Francisco-based utility company during the fourth quarter. The transaction reduced the position 47.55% and the equity portfolio 6.38%, relegating the stake from the largest holding to the fifth-largest holding.
GuruFocus ranks PG&E's financial strength 3 out of 10 on several warning signs, which include a low Piotroski F-score of 2 and interest coverage and debt ratios that underperform over 82% of global competitors.
Other gurus with large holdings in PG&E include Daniel Loeb (Trades, Portfolio)'s Third Point, Seth Klarman (Trades, Portfolio)'s Baupost, David Abrams (Trades, Portfolio)'s Abrams Capital Management and Howard Marks (Trades, Portfolio)' Oaktree Capital Management.
Micron Technology
Tepper sold 4.25 million shares of Micron Technology, trimming the position 34.69% and the equity portfolio 3.53%. Shares averaged $60.50 during the fourth quarter.
GuruFocus ranks the Boise, Idaho-based semiconductor company's financial strength 7 out of 10 on the back of a strong Altman Z-score of 6.03 despite debt ratios outperforming just approximately 60% of global competitors.
Li Lu (Trades, Portfolio)'s Himalaya Capital also has a holding in Micron Technology.
AT&T
Tepper eliminated its 4.625-million share stake in AT&T, curbing the equity portfolio 2.33%. Shares averaged $28.55 during the fourth quarter.
GuruFocus ranks the Dallas-based telecom company's financial strength 3 out of 10 on several warning signs, which include a low Altman Z-score of 0.79 and interest coverage and debt ratios underperforming over 66% of global competitors.
Occidental Petroleum
Tepper purchased 8,100,540 shares of Occidental Petroleum (OXY, Financial), allocating 2.10% of the equity portfolio to the position. Shares averaged $13.78 during the fourth quarter; the stock may be a possible value trap given its low price-to-GF Value of 0.62 as of Wednesday.
GuruFocus ranks the Houston-based energy exploration and production company's financial strength 2 out of 10 on several warning signs, which include a low Piotroski F-score of 3 and debt ratios underperforming over 85% of global competitors.
Gurus with large holdings in Occidental include Dodge & Cox and Carl Icahn (Trades, Portfolio).
Energy Select Sector SPDR Fund
Tepper purchased 3.125 million shares of Energy Select Sector SPDR Fund (XLE, Financial), giving the position 1.77% equity portfolio weight. Shares averaged $34.68 during the fourth quarter.
According to the State Street Global Advisors' website, the Energy Select Sector SPDR Fund seeks to track the performance of an index comprised of companies engaging in oil, gas, consumable fuel and energy equipment production. GuruFocus data shows that the exchange-traded fund has a price-book ratio of 1.36 and a dividend yield of 4.59%.
Amazon
Tepper added 56,200 shares of Amazon (AMZN, Financial), boosting the position 39.72% and the equity portfolio 2.74%. Shares averaged $3,191.09 during the fourth quarter.
GuruFocus ranks the Seattle-based e-commerce giant's profitability 8 out of 10 on several positive investing signs, which include a five-star business predictability rank and a return on assets that outperforms over 85% of global competitors.
Disclosure: No positions.
Read more here:
- David Tepper Issues Stark Warning About Speculative Trading
- Warren Buffett's Berkshire Reveals 4th-Quarter Trades
- Li Lu Buys Buffett's Apple, Reduces Facebook in 4th Quarter
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