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By Matt Doiron

Even with the inherent delay that comes with 13F filings (most of these were only released in mid February and detail portfolios of hedge funds and other major investors as of the end of December), there are a few ways that the investing public can use them. We have found that the most popular small cap stocks among hedge funds produce an excess return of 18 percentage points per year on average (learn more about our research on small cap stock picks) and it's possible that other strategies are possible as well. We also analyze individual 13F filings for notable investors' top stock picks. An alternative to the largest holdings reported on a 13F comes from comparing it to the one from three months earlier and looking for new positions - those that a hedge fund started buying relatively recently. Here are our quick thoughts on the five largest new positions that billionaire David Tepper's Appaloosa Management reported owning (or see the full list of Tepper's stock picks):

Appaloosa initiated a position of 4.3 million shares in HCA Holdings, Inc. (NYSE:HCA), the largest publicly traded hospital by market cap at a valuation of $16 billion. HCA trades at only ten times trailing earnings, easily placing it in value territory (though many other hospital stocks trade cheaply as well, possibly on uncertainty as to how they will be affected by further healthcare regulations). Wall Street analysts expect low but positive earnings growth at HCA, and the forward P/E based on estimates for 2014 is 9.

Tepper also liked Metlife, Inc. (NYSE:MET), buying 3.4 million shares between October and December. Metlife reported abnormally lower earnings last quarter compared to the fourth quarter of 2011, even though revenues were higher. The stock carries a beta of 2, demonstrating that unlike many other companies operating in different parts of the insurance industry it tends to respond strongly to changes in market conditions. The sell-side is optimistic about Metlife, with their earnings projections implying a forward earnings multiple of 6 and a five-year PEG ratio of 0.8.

Transocean Ltd. (NYSE:RIG) was another of Appaloosa's new stock picks. Fellow billionaire and activist Carl Icahn has been taking a large position in Transocean, claiming that the contract offshore driller needs to do a better job of returning cash to shareholders (find Icahn's favorite stocks); Peer SeaDrill (NYSE:SDRL) pays a dividend yield of about 9%. Analyst consensus for 2013 has Transocean trading at a current-year P/E of 11. The offshore drilling business - particularly in deep water - is dependent on high oil prices and so is at risk of losing out from higher onshore production in the U.S. particularly from shale plays.

Oil and gas equipment and services company Weatherford International Ltd. (NYSE:WFT), which as might be imagined is also tied to drilling activity, was another new player in the fund's portfolio with Appaloosa owning 5 million shares at the end of 2012. Weatherford is another stock where analyst expectations are high, going by the current-year earnings multiple of 12 and the five-year PEG ratio of 0.7. The stock is down 23% in the last year, and we'd note that both it and Transocean are characterized by high betas as oil prices tend to correlate with economic activity.

Tepper and his team were buying another offshore drilling contractor, Noble Corporation (NYSE:NE), during the fourth quarter of 2012. We're aware that the fund manager is generally bullish going by recent media appearances, and he seems to particularly like drilling prospects judging by these new stock picks. Noble's revenue was up 28% in its most recent quarter compared to the same period in the previous year, but earnings were essentially unchanged. The stock carries a forward earnings multiple of 7 as once again analyst consensus is positive. These three new picks are certainly cheap but we would warn investors against being too exposed to poor financial conditions for offshore drilling.

Source: Billionaire David Tepper's New Stock Picks