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Appaloosa Management L.P. is a Short Hills, NJ-based hedge fund management firm founded by David A. Tepper. The firm manages over $4B in equities and has beaten the S&P 500 consistently by a large margin.

I discussed the Top Buys of Appaloosa in my previous article. In addition to buys, it is also interesting to look at top companies where Appaloosa is booking profit and selling its holdings.

The following is a list of Appaloosa's top five sells as released in its most recent 13F filing:

Company Name Ticker MV Change (USD $) Current Position Change In Position
Hewlett-Packard Co HPQ -155,146,889 2,863,268 -3,467,458
Bank of America Corp BAC -119,887,267 10,000,000 -7,215,849
Applied Materials Inc AMAT -38,883,012 6,549,085 -1,395,000
Lam Research Corp LRCX -27,785,655 1,137,286 -241,900
KLA-Tencor Corporation KLAC -21,806,498 1,330,567 -268,500

In addition to the above stocks, Appaloosa completely exited its positions from the following three stocks:

Company Name Ticker MV Change (USD $) Current Position Change In Position
Banco Santander SA-Spon ADR STD -6,911,312 0 -590,206
Newcastle Investment Corp NCT -3,299,000 0 -546,192
Morgans Hotel Group Co MHGC -829,541 0 -84,647

My favorite short from the above listed stocks is Bank of America. I believe its stock price is likely to continue its underperformance going forward. With U.S. debt downgrade and widening CDS spreads it is definitely not a good time to buy/hold banking stocks. In particular, banks with weaker balance sheets like Bank of America will likely need to raise cash. Further, legal troubles for Bank of America seem to be far from over. AIG recently sued it to recover more than $10 billion of losses alleging massive fraud on mortgage debt. If one does need to own banks, its best to go for well capitalized names like Wells Fargo (WFC) where the risk-rewards are more favorable.

For other companies in above lists, here are some of the specifics about these companies, including a brief description of their business, growth expectations (topline and bottomline):

  • Hewlett-Packard is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors. Its operations are organized into seven segments: Services, Enterprise Storage and Servers (NYSE:ESS), HP Software, the Personal Systems Group (OTC:PSG), the Imaging and Printing Group (NYSE:IPG), HP Financial Services (HPFS), and Corporate Investments. HP's EPS forecast for the current year is $5.02 and next year is $5.37. According to consensus estimates, its top line is expected to grow 2.60% in the current year and 3.60% next year.
  • Applied Materials provides manufacturing equipment, services and software to the global semiconductor, flat panel display, solar photovoltaic (PV) and related industries. Applied's customers include manufacturers of semiconductor wafers and chips, flat panel liquid crystal displays (LCDs), solar PV cells and modules, and other electronic devices. Applied Material's EPS forecast for the current year is $1.41 and next year is $1.33. According to consensus estimates, its top line is expected to grow 14.60% in the current year and decline 1.80% next year.
  • Lam Research is a supplier of wafer fabrication equipment and services to the worldwide semiconductor industry. The Company designs, manufactures, markets, and services semiconductor processing equipment used in the fabrication of integrated circuits. Its etch and clean technologies enable customers to build integrated circuits. Lam Research's EPS forecast for the current year is $2.99 and next year is $3.95. According to consensus estimates, its top line is expected to decline 15.30% in the current year and grow 7.50% next year.
  • KLA-Tencor is a supplier of process control and yields management solutions for the semiconductor and related nanoelectronics industries. The Company is engaged in the design, manufacture and marketing of process control and yield management solutions for the semiconductor and related nanoelectronics industries. KLA-Tencor's EPS forecast for the current year is $4.16 and next year is $4.38. According to consensus estimates, its top line is expected to decline 6.90% in the current year and grow 1.70% next year.
  • Banco Santander, S.A. is a financial group operating principally in Spain, the United Kingdom, Portugal, other European countries, Brazil and other Latin American countries and the United States, offering a range of financial products. It operates in four segments: Continental Europe, United Kingdom, Latin America and Sovereign. Banco Satender's EPS forecast for the next year is $1.25. According to consensus estimates, its top line is expected to decline 8.20% next year.
  • Newcastle Investment is a real estate related investment and finance company. Newcastle invests in, and actively manages a portfolio of, real estate securities, loans and other real estate related assets. Newcastle's EPS forecast for the current year is $2.89 and next year is $2.11. According to consensus estimates, its top line is expected to decline 2.20% in the current year and grow 9.80% next year.
  • Morgans Hotel Group is a fully integrated hospitality company that operates, owns, acquires, develops and redevelops boutique hotels primarily in gateway cities and select resort markets in the United States, Europe and in select international locations. Morgans' EPS forecast for the current year is -$1.92 and next year is -$0.98. According to consensus estimates, its top line is expected to decline 10.60% in the current year and 5.80% next year.

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

Source: Top Sells of David Tepper's Appaloosa Management