David Tepper's Bullish Stock Picks

David Tepper is one of our favorite hedge fund managers. He made $4 billion in 2009 and currently ranks as the 258th richest person in the world. He outperformed the market in 2010 as well despite managing a very large portfolio. David Tepper’s Appaloosa manages $16 billion and returned around 30% in 2010.

We are very interested in Tepper’s freshest ideas, the stocks that Tepper initiated brand new positions or increased his holdings. We believe these stock picks are more likely to outperform index funds. Here is how these stocks performed since the end of first quarter:

CompanyName	Ticker	value	Activity	Return
HEWLETT PACKARD CO	HPQ	259370	8%	-11%
GOODYEAR TIRE & RUBR	GT	228415	51%	12%
INTERNATIONAL PAPER	IP	173188	6%	0%
MACYS INC	M	162848	28%	21%
UNITED CONTINENTAL	UAL	131911	49%	-2%
DEAN FOODS CO NEW	DF	131191	22%	23%
C F INDUSTRIES	CF	127242	44%	4%
U S AIRWAYS GROUP INC	LCC	108415	329%	2%
VALERO ENERGY CORP	VLO	76485	New	-14%
METLIFE INC	MET	67095	New	-2%
NAVISTAR INTL	NAV	47908	50%	-19%
MUELLER WATER PRODU	MWA	41766	280%	-11%
C V R ENERGY	CVI	36046	New	6%
CON WAY INC	CNW	35361	51%	-1%
DELTA AIR LINES INC	DAL	35208	131%	-6%
FRONTIER OIL CORP	FTO	17916	New	10%
M P G OFFICE TRUST INC	MPG	17483	13%	-23%
K B HOME	KBH	17278	New	-21%
MARATHON OIL CORP	MRO	13328	New	-1%
D R HORTON INC	DHI	13045	New	-1%
PULTE GROUP INC	PHM	12115	New	4%
TESORO CORP	TSO	10732	New	-15%
BEAZER HOMES USA INC	BZH	6250	New	-26%
MASCO CORP	MAS	5493	New	-13%
RYLAND GROUP INC	RYL	3150	New	4%
HOLLY CORP	HOC	2830	New	15%

David Tepper’s bullish stock picks returned 1.8% during the second quarter of 2011. This is 1.7 percentage points better than S&P 500’s 0.1% return. We also calculated David Tepper’s return in large-cap stocks that are constituents of S&P 500 index. Unfortunately those positions lost 3.2% during the second quarter because of its heavy exposure to financial stocks. David Tepper reduced his financial holdings by around 45% during second quarter but that wasn’t enough. Investors imitating Tepper’s bullish stock picks beat investors who are imitating Tepper’s largest stock picks.

David Tepper’s bullish bets outperformed index funds mainly because of his increased positions in Goodyear Tire, Macy’s, and Dean Foods. These were among his largest bullish positions and each of these stocks returned more than 20% during second quarter. David Tepper was the largest holder of GT at the end of first quarter. Steve Cohen’s SAC and Ken Griffin’s Citadel are also among GT investors. David Tepper was also the largest holder of Macy’s among the 300+ hedge funds we track. Ivory Capital’s Curtis Macnguyen and Ken Griffin’s Citadel are also among M investors (See Ken Griffin’s favorite stocks here).

We like David Tepper and believe that investors will be able to beat index funds by imitating his bullish stock picks. Investors can check the changes in Tepper’s portfolio and his favorite holdings here.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.