David Tepper's hedge fund firm Appaloosa Management has started a brand new position in Dean Foods (DF). Per a 13G filed with the SEC, the hedge fund disclosed a 7.35% ownership stake in DF with 13,396,536 shares due to trading on December 28th, 2010. The majority of shares are held in Appaloosa's Palomino fund. You can view Appaloosa's other investments in our newsletter, Hedge Fund Wisdom.
Shares of Dean Foods spiked over 11% on Friday as Appaloosa disclosed its stake. The company's shares have been on somewhat of a gradual death spiral, down 45% over the past year. In the near-term, it seems as though the company is being squeezed by input costs (namely commodities). Whether Tepper and his team see this as a value play remains to be seen, as no clear thesis has been revealed. Or, maybe this trade simply falls under his 'don't fight the Federal Reserve' trade. After all, in September Tepper said he likes equities here.
Per Google Finance:
Dean Foods is a food and beverage company. The Company operates through two segments: Fresh Dairy Direct and WhiteWave-Morningstar. Fresh Dairy Direct, formerly DSD Dairy, is a processor and distributor of milk and other dairy products in the United States, with products sold under more than 50 local and regional brands and a range of private labels.
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Disclosure: No position