David Tepper's Top 25 Stock Picks

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 |  Includes: AAL, AAPL, AMAT, BAC, C, CF, CVI, DF, ETFC, GT, HPQ, IP, M, MDT, MET, MOS, MRK, MSFT, MU, PFE, RBS, UAL, UNH, VLO, WFC
by: Insider Monkey

David Tepper is the founder of Appaloosa Management. He came under the spotlight in 2009 after betting on Bank of America (NYSE:BAC), Citigroup (NYSE:C) and other large financial institutions during the financial crisis. He generated more than 100% in returns in 2009. Appaloosa made $7 billion while David Tepper himself took home $4 billion. He returned around 30% in 2010. Tepper was listed by Forbes as the 62nd richest man in America.

In the first quarter of 2011, David Tepper’s Appaloosa reduced stakes in five major banks. He cut an average stake of 43% in Citigroup, Wells Fargo (NYSE:WFC), Bank of America, Fifth Third Bancorp (NASDAQ:FITB), and SunTrust Banks Inc. (NYSE:STI). The timing was right as these banks have underperformed the market since then. Therefore, we believe David Tepper was 40% right on banks.

In the second quarter ending June, Tepper remained bearish on banking stocks. He reduced his stake in Citigroup and Wells Fargo & Co by 6% each. He also significantly reduced his Bank of America Corp holdings by 42%. His decision was right as the financial sector continued to underperform the market since the end of second quarter. Citigroup lost -27.2%, Wells Fargo lost -13.1%, and Bank of America lost -33.9%. Among others, he also reduced his stake in Dean Foods (NYSE:DF) by 31% and Hewlett-Packard (NYSE:HPQ) by 55%. Here are David Tepper’s 25 stock picks at the end of June:

Company

Ticker

Value (x1000)

Activity

Return

Citigroup Inc

C

299,885

-6%

-27.2%

Pfizer Inc.

PFE

298,597

-6%

-12.6%

Goodyear Tire & Rubber

GT

234,766

-8%

-25.0%

Valero Energy Corp

VLO

198,474

203%

-18.8%

Macy's Inc

M

184,581

-6%

-12.9%

CVR Energy Inc

CVI

180,576

371%

3.6%

The Mosaic Co

MOS

161,877

NEW

-4.8%

International Paper

IP

151,995

-11%

-13.5%

United Continental

UAL

125,953

-3%

-21.3%

CF Industries

CF

122,898

-7%

16.2%

Dean Foods Co

DF

110,892

-31%

-30.6%

Bank of America

BAC

109,600

-42%

-33.9%

US Airways

LCC

109,429

-1%

-38.5%

Micron Technology

MU

108,697

19%

-14.8%

Hewlett-Packard

HPQ

104,223

-55%

-14.7%

Microsoft Corp

MSFT

102,542

-18%

-3.1%

Applied Materials

AMAT

85,204

-18%

-9.9%

Wells Fargo & Co

WFC

81,566

-6%

-13.1%

Merck & Co Inc

MRK

74,590

-6%

-11.6%

UnitedHealth Group

UNH

68,400

-6%

-14.8%

Apple Inc

AAPL

67,134

0%

11.3%

MetLife Inc

MET

61,861

-6%

-23.6%

E-Trade Financial

ETFC

58,885

0%

-15.3%

Royal Bk Scotland

RBS

57,331

0%

-26.4%

Medtronic Inc

MDT

55,640

-6%

-18.5%

Click to enlarge

As of June 2011, Valero Energy Corp (NYSE:VLO) is Tepper’s fourth largest holding. During the second quarter, Tepper increased his stake in the company by 203%. He has $198 million worth of Valero Energy Corp. Since the end of June, Valero has lost around 18%. Joel Greenblatt’s Gotham Asset Management added Valero to its 13F portfolio during the first quarter (check out Joel Greenblatt’s bullish stock picks).

Tepper added Mosaic Company (NYSE:MOS) to Appaloosa’s equity portfolio in the second quarter. He purchased $161 million worth of Mosaic. As of now, MOS is Appaloosa’s 7th largest holding. Since the end of June, MOS has returned -4.8%. This is still better than SPY’s 11% loss. Dan Loeb is also bullish about Mosaic and bought the stock during second quarter. Wallace Weitz added Mosaic to Wallace R. Weitz & Co.’s equity portfolio in the first quarter (check out Wallace Weitz’s $2 billion portfolio).

US Airways Group (LCC) lost -38.5% since the end of June. During the second quarter of 2011, Tepper reduced LCC by a meager 1%. He had increased LCC by 329% during the first quarter. David Tepper’s Appaloosa Management has the largest stake in the company. As of now, he owns shares of LCC worth $109 million. Jeffrey Vinik’s Vinik Asset Management has the second largest stake in US Airways Group (view Jeffrey Vinik’s current portfolio).

David Tepper’s 25 stocks underperformed the market by 4.3 percentage points since the end of June. However, Tepper is rightly bearish about banking stocks and knows when to sell. We believe investors can beat the market in the long-term by following David Tepper’s top stock picks like MOS.



Disclosure: Long C, MSFT.