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Summary

  • David Tepper's US long equity portfolio decreased 21%, from $9.06B to $7.15B, this quarter.
  • The huge 36% combined position in SPDR S&P 500 Index ETF and PowerShares QQQ ETF was reduced to just 7.85% of the portfolio.
  • Appaloosa significantly increased positions in American Airlines, CBS Corporation, Facebook Inc., General Motors, Masco Corporation, and Priceline Group.

This article is part of a series that provides an ongoing analysis of the changes made to David Tepper's US stock portfolio on a quarterly basis. It is based on Appaloosa Management's regulatory 13F Form filed on 08/14/2014. Please visit our Tracking David Tepper's Appaloosa Management Portfolio series to get an idea of his investment philosophy and the fund's moves during Q1 2014.

This quarter, Tepper's US long equity portfolio decreased 21%, from $9.06B to $7.15B. The portfolio raised cash, consistent with his public statements regarding current market posture. The number of holdings decreased from 58 to 50 as several very small positions were eliminated. There were also three significant additions: Mohawk Industries, Ryland Group, and Weatherford International. The largest five positions are Google Inc. (8.74%), American Airlines (7%), General Motors (6.59%), Citigroup Inc. (5.68%), and Priceline (5.30%). Combined, they account for one-third of the entire US long portfolio.

New Stakes:

Mohawk Industries (NYSE:MHK), Ryland Group (NYSE:RYL), and Weatherford International (NYSE:WFT): These are small positions (less than ~1% of the US long portfolio each) established this quarter. MHK is a 1.10% of the US long portfolio stake established this quarter at prices between $130 and $141. The stock currently trades at $145. RYL is a 0.60% of the US long portfolio stake established this quarter at prices between $36 and $41.50. The stock currently trades at $37.15. WFT is a 0.86% of the US long portfolio stake established this quarter at prices between $22 and $23. The stock currently trades at $22.28.

Stake Disposals:

MetLife Inc. (NYSE:MET): The small 0.65% of the US long portfolio MET position had seen consistent selling since Q3 2013 - at that time, it was a fairly large position, at just over 3%. It was reduced by more than half last quarter at prices between $47 and $55. This quarter, the remaining position was eliminated at prices between $49 and $57. The original position was built up in Q4 2012 and Q1 2013 at prices between $31.50 and $40.20. The stock currently trades at $53.63.

Qualcomm (NASDAQ:QCOM), Trinity Industries (NYSE:TRN), Delphi Automotive (NYSE:DLPH), JPMorgan Chase (NYSE:JPM), and KBR Inc. (NYSE:KBR) & Calls: These small positions (less than 1% of the US long portfolio) were eliminated this quarter. As the position sizes are too small, the stake elimination does not indicate a clear bias.

Stake Increases:

American Airlines (NASDAQ:AAL): AAL is Tepper's second-largest position, at 7% of the US long portfolio. The position was established when the newly merged airline (US Airways and American Airlines) started trading in Q4 2013 - Tepper bought into US Airways in Q1 2012 at much lower prices. He is sitting on large gains on this investment. The stake was increased by ~23% last quarter at prices between $25 and $39. This quarter saw an additional 35% stake increase at prices between $33.37 and $44.55. The stock currently trades at $40.43.

CBS Corporation (NYSE:CBS): CBS is a 1.88% of the US long portfolio stake, increased by just over 70% this quarter at prices between $54 and $63. It was increased from a very small stake to a 0.86% position last quarter at prices between $56 and $68. The stock currently trades at $60.74. The aggressive build-up indicates a bullish bias.

Chicago Bridge & Iron (NYSE:CBI): CBI has been in the portfolio since Q2 2013. Around 1.5M shares were purchased for around $56 at that time. The stake had since been sold down to 1.23M shares (1.43% of the US long portfolio) as of last quarter. This quarter, the position was increased by ~22% at prices between $65.51 and $87.65. The stock currently trades at $63.95. The activity indicates a mild bullish bias.

Expedia Inc. (NASDAQ:EXPE): EXPE is a ~1% position established last quarter at prices between $63 and $80. It was increased by around 29% this quarter at prices between $68 and $80. The stock currently trades outside those ranges at $86.34.

Facebook Inc. (NASDAQ:FB): FB was increased from a minutely small stake to a fairly large 3.37% of the US long portfolio position this quarter at prices between $56 and $68. The stock currently trades at $75.29. The activity indicates a bullish bias.

General Motors (NYSE:GM): The 6.59% of the US long portfolio GM position was increased by almost 60% last quarter at prices between $34 and $41. This quarter, the position was increased by another two-thirds at prices between $32 and $37. The bulk of the original stake was purchased in Q1 2012 and Q2 2012 at prices between $21 and $27. The stock currently trades at $34.57.

Google Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL): GOOG is Appaloosa's largest position, at 8.74% of the US long portfolio. The position was increased by 87% last quarter at prices between $550 and $610 (split-adjusted). It was increased by 22% this quarter at prices between $510 and $579. The stock currently trades at $587. GOOG has been a significant presence in the portfolio since Q1 2012. The original purchase was at prices between $290 and $325. The position size has wavered, but the last three quarters have seen a huge increase, at prices between $425 and $610.

Masco Corporation (NYSE:MAS): MAS stake was almost doubled to a significant 1.92% position this quarter at prices between $19.54 and $22.89. The stock currently trades just outside that range, at $23.19.

United Continental Holdings (NYSE:UAL): The 2.97% of the US long portfolio UAL stake was increased by ~13% this quarter at prices between $39 and $48. The bulk of the original stake was established in Q1 2012 at prices between $18.21 and $25.

Priceline Group Inc. (NASDAQ:PCLN): PCLN is a 5.30% of the US long portfolio position established last quarter at prices between $1113 and $1370. This quarter, the position was increased by over 70% at prices between $1108 and $1292. The stock currently trades at $1272. The large stake build-up indicates a clear bullish bias.

Delta Airlines (NYSE:DAL) and Owens Corning (NYSE:OC): These positions saw marginal buying (less than ~5% stake increase each) this quarter. The activity indicates a mild bullish bias toward these businesses. DAL and OC became significant positions in the portfolio in Q1 2012.

Stake Decreases:

American International Group (NYSE:AIG): AIG is a small 0.92% of the US long portfolio position that was reduced by more than half last quarter at prices between $46.88 and $52.22. It has seen consistent selling every quarter since the stake establishment in Q3 2012. The original 6.75% of the portfolio position was purchased at prices between $31 and $35. This quarter saw a minor decrease, and the stock currently trades at $54.62.

Apple Inc. (NASDAQ:AAPL): AAPL became a significant presence in the portfolio in 2011, although the stock was also purchased in 2009. In Q1 2012, around 3.5M shares (split-adjusted) were purchased at prices between $60 and $87, and the stake represented around 10% of the US long portfolio at the time. The next quarter saw some selling at prices between $76 and $91. In Q4 2012, another 2.8M shares were purchased at prices between $73 and $94. The stock was consistently sold from the next quarter onwards, and by Q4 2013, the position was at 1.5M shares. Most of the selling happened in Q1 2013 and Q2 2013 at prices between $56 and $75. Last quarter saw a 16% stake increase at prices between $71 and $80. This quarter saw marginal selling, and the stock currently trades at $100.53.

Citigroup Inc. (NYSE:C): C is a top-five position at 5.68% of the US long portfolio. Last quarter saw a 4% stake increase at prices between $46.34 and $55. The original position consisted of around 6M shares purchased in Q1 2012 at prices between $27 and $37, and another 3M shares purchased in Q2 2012 at prices between $25 and $37. This quarter saw a 14% reduction at prices between $45.68 and $49.58. The current position is at just over 8.6M shares, and the stock trades at $49.70.

PowerShares QQQ ETF (NASDAQ:QQQ) & Calls and SPDR S&P 500 ETF (NYSEARCA:SPY) & Calls: These were the two largest positions in the portfolio as of last quarter. The stakes were drastically reduced this quarter, indicating clear caution toward the US market overall. The QQQ stake was reduced from around 14% to just 4%, while the SPY stake was reduced from over 22% to just 3.65%.

Prudential Financial (NYSE:PRU): The small 0.92% of the US long portfolio PRU stake was reduced marginally this quarter. It was reduced by ~46% last quarter at prices between $80.45 and $92.22. That position was originally purchased in Q1 and Q2 2013 at prices between $55 and $73. Tepper is harvesting large gains from this position.

Whirlpool Corporation (NYSE:WHR): The 1.97% of the US long portfolio position was reduced marginally this quarter. It was increased by just over 125% last quarter at prices between $127 and $159. The stock currently trades at $153.

Celanese Corporation (NYSE:CE), E. I. du Pont de Nemours and Company (NYSE:DD), Eastman Chemical (NYSE:EMN), Ingredion Inc. (NYSE:INGR), KBR Inc. & Calls: These are very small positions (less than ~1% of the US long portfolio) that were reduced this quarter. As the position sizes are very small, the activity does not indicate any clear bias.

Kept Steady:

Ford Motor (NYSE:F): The 1.25% F stake was kept steady this quarter. The original position was a 6.5M share stake from Q1 2012 purchased at prices between $10.76 and $12.80, and the current position is at 7.3M shares. The stake has wavered in the interim: it peaked at almost 12M shares in Q1 2013, but since then, has been sold. The stock currently trades at $17.36.

Goodyear Tire & Rubber (NASDAQ:GT): GT is a very long-term position that has been in the portfolio since before the financial crisis. In 2007, the stake stood at 2.7M shares (~5% of portfolio). The position size peaked at 22M shares in Q2 2013, when a large increase happened at prices between $12 and $15.50. Last quarter saw a ~7% reduction at prices between $22.67 and $28.12. The stock currently trades at $25.60.

Halliburton Company (NYSE:HAL): HAL is a 3.27% of the US long portfolio position that was increased by around four times last quarter at prices between $48 and $59.50. The stock currently trades at $68.77. The aggressive stake build-up indicates a clear bullish bias.

HCA Holdings (NYSE:HCA): HCA became a significant position in the portfolio in Q4 2012, when over 4M shares were purchased in the low-30s price range. The stake currently is at over 5M shares, and account for 4.2% of the US long portfolio. The stock has more than doubled, and Tepper is sitting on large long-term gains.

Huntsman Corporation (NYSE:HUN): HUN is a 2.88% of the US long portfolio position that has been in the portfolio since Q1 2012. Just over 5M shares were purchased at that time, for around $13 per share. The stake is now at 7.3M shares, and here again, Tepper is sitting on large long-term gains.

MGM Resorts (NYSE:MGM): The MGM position was sold by almost half last quarter at prices between $23 and $28.39. The bulk of the original MGM position was established in Q3 2012 at prices between $9.26 and $11.41. The stock currently trades at $25.11.

Walt Disney (NYSE:DIS): DIS was a minutely small 0.26% position in Q4 2013. It was increased significantly last quarter at prices between $70 and $83.34. The stock currently trades at $90. The position is now at 1.65% of the US long portfolio.

Schlumberger Ltd. (NYSE:SLB), Triumph Group (NYSE:TGI), Terex Corporation (NYSE:TEX), Comcast Corporation (NASDAQ:CMCSA), Broadcom Inc. (NASDAQ:BRCM), ASML Holding N V (NASDAQ:ASML), Axial Corporation (NYSE:AXLL), and Baidu Inc. (NASDAQ:BIDU): These are very small positions (less than ~1% of the US long portfolio) that were left untouched this quarter. As the position sizes are very small, the activity does not indicate any clear bias.

Appaloosa's 13F portfolio also has minute stakes (less than 0.5% of the portfolio each) in the following businesses: Berry Plastics (NYSE:BERY), General Motors and Hartford Financial warrants, HD Supply Holdings (NASDAQ:HDS), Mueller Water (NYSE:MWA), and Ply Gem (NYSE:PGEM).

The spreadsheet below highlights changes to Tepper's US stock holdings in Q2 2014:

(click to enlarge)

Source: Tracking David Tepper's Appaloosa Management Portfolio - Q2 2014 Update