New Jesey-based hedge fund Appaloosa Management LP has disclosed an equity portfolio valued at some $5.7 billion as of the end of the first quarter of 2015. The equity portfolio is mainly invested in Consumer Discretionary (30%), Finance (25%) and Technology (13%) stocks. The fundâs last 13F filing showed that the fund raised its exposure towards materials and tech stocks but reduced its holdings in the industrials sector.
In this article we will look into the top three picks held in the industrials âsector at the end of Q1. These are United Continental Holdings Inc (UAL, Financial), Delta Air Lines, Inc. (DAL, Financial) and Owens Corning (OC, Financial). The stocks comprised 4.68%, 3.68% and 2.23% of the total portfolio, which is highly concentrated for me because the top 10 stocks amass almost two-thirds of the total portfolio value.
In United Continental Holdings Inc, the fund holds 3.97 million shares, down by 19% on the quarter; the value of the stake amounts to $266.9 million. It is important to mention that the stock gained only 0.54% during the quarter and today the stock is sinking due to ratings news. Not even the recent agreement between the company and Air China, to introduce 22 new routes between the two countries, canât stop today´s significant drop in the stock market. Raymond James (RJF, Financial) has lowered the firm´s ranking to âoutperformâ from âstrong buy.â Further, it has cut almost 16% the target price, to $69 from $82.
Other prominent investor of the company is Leon Cooperman (Trades, Portfolio)´s Omega Advisors, with 2.83 million shares, valued at $190.67 billion, held as of the end of the Q1 2015.
Delta Air Lines, Inc. represents the second-most valuable investment in the industrial sector. After a 45% increase in the companyâs stake during the first quarter, the fund amounted to about 4.67 million shares valued at $210.03 million. But despite this bullish sentiment, the stock had a negative return of 8.59% in the first quarter.
This company was also cut by Raymond James from Strong Buy to Outperform. At the end of the first quarter, Paul Ruddock and Steve Heinz´s Lansdowne Partners held the highest number of Delta shares, its stake containing 24.76 million shares valued at about $1.1 billion.
Finally is Owens Corning, a general building materials company. The fund held about 2.94 million shares valued at $127.38 million at the end of the first quarter of 2015. With a market cap of $4.82 billion, the stock was up by 21.19% during the first quarter while Mr. Tepper was increasing its exposure by 3% in the same time frame. The stockâs total returns are at 11.02% year to date, compared to 1.41% for PPG Industries, Inc. (PPG, Financial).
According to the rating issued from 13 Wall Street Analysts, this Zacks Rank #3 (Hold) company has a mean price target of $43.77. Considering the actual trading price, its upside potential is by 10%.
Ken Griffin´s Citadel Investment held a stake of 1.28 million shares of the firm valued at $55.49 million. This guru increased the stake by 2824% in the reported quarter. So, it seems to me that Griffin could have anticipated this nice movement of Owens Corning âstock.
Disclosure: As of this writing, Omar Venerio did not hold a position in any of the aforementioned stocks
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