David Tepper (Trades, Portfolio)'s Top 4 Holdings: GM, C, PCLN, and HCA
David Tepper (Trades, Portfolio) is an American hedge fund manager and founder of Appaloosa Management. He has become known as a philanthropist and was ranked one by Institutional Investor’s Alpha earning $3.5 billion in 2013. Tepper had one of the best five-year performance stretches in the hedge fund industry. His Palomino fund had a 3.4% return in the first half of 2014.
Unlike most of other investment gurus, David Tepper (Trades, Portfolio) is straightforward with his investment philosophy and has views as “it is what it is.” He acknowledges the risks he faces in his investments and describes it as “I either get eaten, or I get the good grass.” Tepper started Appaloosa Management with $57 million of capital; today Tepper manages over $14 billion. His objective initially was to capitalize on investments on distressed situations with a 70-30 debt to equity allocation in public markets.
David Tepper (Trades, Portfolio)’s investment philosophy is, unlike many investors who focus on numbers and trends, recognizing and investing in new opportunities. David Tepper (Trades, Portfolio) has expertise in distressed equity as well as debt investing which explains the volatility in his investment history. He will invest in near-bankrupt companies and will invest in all types of markets. In addition, he invests in companies with high revenues and believes the government will bail out companies. His reasoning for investing in near-bankrupt companies is “I’m buying a little bit today. It’s a big company with a lot of revenue so we probably will end up making money.”
A lot of his reasoning behind his investments is that the government will not allow banks or companies to fail. This explains why he was heavily invested in American banks in 2009. Lately Tepper has been considered more conservative but is still invested in energy companies.
Stocks that David Tepper (Trades, Portfolio) keeps buying
No. 1: General Motors Co (GM, Financial), weightings: 7% - 14,863,791 shares
General Motors Company was incorporated as a Delaware corporation in 2009. The company designs, builds and sells automobiles. General Motors Co has a market cap of $51.83 billion; its shares were traded at around $32.27 with a P/E ratio of 53.20 and P/S ratio of 0.35. The dividend yield of General Motors Co stocks is 2.80%.
General Motors has the highest weighting in Tepper’s portfolio. This matches Tepper’s ideology to invest in companies that have government support. Moreover, ever since GM claimed bankruptcy the government as well as the restructuring of the company has vastly improved the company’s health.
GM’s price has showed significant growth over the past 3 years from $20 to $32. In addition, GM’s revenue has been steadily increasing since 2010 and is reported to be $155.4 billion as of December 2014.
Recently, there have been issues for GM because of a late safety recall involving an ignition switch fault; there have been numerous deaths reported because of this fault. Arizona sued GM for $10,000 fine on each defective vehicle sold in state amounting to roughly $3 billion because late safety recalls. However, this may not affect the company as much seeing as GM has $28 billion in cash on its balance sheet as well as $6 billion in annual cash flow.
No. 2: Citigroup Inc (C, Financial), weightings: 6.4% - 8,319,639 shares
Citigroup Inc was incorporated in 1988 under the laws of the state of Delaware. Citigroup is a financial services holding company providing financial products to various institutions. Citigroup Inc has a market cap of $161.87 billion; its shares were traded at around $53.81 with a P/E ratio of 18.40 and P/S ratio of 2.10. The dividend yield of Citigroup Inc stocks is 0.10%.
Citigroup price has been showing massive growth over the last 3 years. Starting at $25, Citigroup price has grown to over double that amount at 54$ today.
Citigroup was fined $15 million on November 24, 2014 by FINRA for failing to sufficiently supervise its research analysts’ interactions with the bank’s clients. This may affect shareholder confidence and trust in the company. Citigroup has had issues in its history with crossing the communication boundary with research and investment banking.
Citigroup was also fined $950 million this year by the U.S. Office of the Comptroller of the Currency for attempting to manipulate foreign exchange markets. This also damages the company’s reputation and may affect shareholder confidence.
No. 3: Priceline Group Inc (PCLN, Financial), weightings: 6.3% - 366,574 shares
Priceline Group Inc, formerly priceline.com Incorporated, was formed as a Delaware limited liability company in 1997 and was converted into a Delaware corporation in July 1998. Priceline Group is an online travel company that offers its customers a range of travel services Priceline Group Inc has a market cap of $60.98 billion; its shares were traded at around $1166.83 with a P/E ratio of 26.30 and P/S ratio of 7.60. Priceline Group Inc had an annual average earnings growth of 54.70% over the past 10 years.
PCLN Price has showed tremendous growth over the past 3 years. At $475 in January 2012, the price has skyrocketed to $1.2k. However, recent prices fell more than 8% after giving a fourth quarter forecast. Priceline estimates that it will earn $9.40 to $10.10 a share as well as revenue increase by 11% to 18% from last year’s fourth quarter.
Priceline has reported high Q3 Earnings this year exceeding Zacks Consensus Estimates. Priceline reported revenues of 2.84$ billion for the quarter, up 25% from last year.
No. 4: HCA Holdings Inc (HCA, Financial), Weightings: 5.5% - 5,326,882 Shares
HCA Holdings Inc was incorporated in Nevada in January 1990 and reincorporated in Delaware in September 1993. HCA Holdings is a health care services company in the United States. HCA Holdings Inc has a market cap of $28.39 billion; its shares were traded at around $67.23 with a P/E ratio of 17.20 and P/S ratio of 0.90. HCA Holdings Inc had an annual average earnings growth of 6.50% over the past 10 years.
HCA price has shown steady growth over the past 3 years from 22.5$ in January 2012 to 69.4$ today. TheStreet Rating team has rated HCA a BUY. HCA has shown a strong growth in earnings of 46.8% and the price has grown over 52% this past year. Moreover, the net income growth has significantly exceeded the S&P 500 and the healthcare industry. HCA’s EPS has also improved by 46.8% in the recent quarter as compared to last year’s.
