Tracking David Tepper's Appaloosa Management Portfolio - Q3 2016 Update

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Includes: AAPL, ABY, AGN, ALL, AMLP, BAC, C, CFG, CYH, DAL, DVMT, ETP, FB, FOX, FOXA, GE, GLBL, GM, GOOG, GOOGL, GT, HAIN, HCA, HDS, HUN, IR, KMI, KYN, LUV, MHK, NXPI, OC, PNC, PPG, QCOM, QHC, SPY, SYF, TERP, TGI, TPX, USFD, VMW, WDC, WHR, WMIH, WPZ, YHOO
by: John Vincent

Summary

David Tepper’s 13F portfolio increased from $3.80B to $4.40B this quarter.

Energy Transfer Partners is the largest individual stock position at 9.76% of the portfolio.

A large new short position in S&P 500 thru SPY Puts was established during the quarter.

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 11/14/2016. Please visit our Tracking David Tepper's Appaloosa Management Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q2 2016.

This quarter, Tepper's 13F portfolio increased ~16% from $3.80B to $4.40B. The increase was primarily due to a large new stake in S&P 500 ETF Put options. Alphabet Inc., last quarter's largest individual stock position was reduced by ~25% this quarter. The number of holdings increased from 37 to 42. The top-five individual stock positions are Energy Transfer Partners LP, Alphabet Inc., Williams Partners LP, Allergan plc, and Allstate Corporation. Combined, they account for ~37% of the 13F holdings. Energy continues to be a major theme in the portfolio.

To know more about Tepper's distress investing style, check out the book Distress Investing: Principles and Technique.

New Stakes:

SPDR S&P 500 Trust ETF (NYSEARCA:SPY) Puts: The short position in SPY is the largest 13F stake at 12.28% of the portfolio. It was established this quarter as the underlying traded between $208 and $219 and it currently goes for $219.

Note: SPY is an actively traded position in Tepper's portfolio. Going back a decade, this is the first time a large short position has been established.

Facebook, Inc. (NASDAQ:FB): FB is a fairly large 4.32% of the portfolio stake established this quarter at prices between $114 and $131 and the stock currently trades near the low end of that range at $117.

Note: FB has had several previous roundtrips in the portfolio: The latest was a fairly large 3.28% of the portfolio position established in Q1 2016 at prices between $94 and $116 and sold last quarter at prices between $109 and $121.

Apple Inc. (NASDAQ:AAPL): AAPL is a ~2% portfolio position purchased this quarter at prices between $95 and $116 and the stock is now at $110.

Note: Apple is a frequently traded stock in Appaloosa's portfolio since early 2012. Most recently, a 2.65% of the US long portfolio stake was established in Q2 2015 at prices between $120 and $133. It was disposed over the next two quarters at prices between $93 and $132.

Bank of America (NYSE:BAC), Citizens Financial Group (NYSE:CFG) and PNC Financial (NYSE:PNC): These three are small (less than ~1.5% of the portfolio each) stakes established this quarter in the financials. All three are trading ~20% above their prices at the end of the quarter.

Note: BAC has seen several roundtrips in the portfolio. The most recent activity follows: It was a 1.67% of the US long portfolio stake established in Q1 2016 at prices between $11.16 and $16.83 and sold last quarter at prices between $12.18 and $15.11.

Qualcomm Inc. (NASDAQ:QCOM), Tempur Sealy Intl. (NYSE:TPX), VMWare, Inc. (NYSE:VMW) and Yahoo! Inc. (NASDAQ:YHOO): These are the other small (less than ~1.5% of the portfolio each) positions established during quarter.

Stake Disposals:

Community Health Systems (NYSE:CYH): CYH position was first purchased in Q4 2015. The following quarter saw a huge 600% increase to a 2.34% portfolio stake at prices between $11 and $23. Last quarter saw a ~12% reduction at prices between $12.08 and $17.30 and disposal this quarter was at prices between $10 and $13.50. The exit was timely as the stock dropped sharply following results earlier this month. It is now at $5.78.

Note: Quorum Health (NYSE:QHC) was spun off from CYH in April. The prices quoted above are adjusted to account for this.

Ingersoll-Rand (NYSE:IR): IR was a small ~0.79% portfolio stake established in Q3 2015 at prices between $50.50 and $69 and increased by ~51% the following quarter at prices between $50.50 and $60. The pattern reversed in Q1 2016: ~30% reduction at prices between $48.50 and $62. That was followed with another ~35% selling last quarter at prices between $59 and $67. The elimination this quarter happened at prices between $63 and $69. The stock currently trades at $74.46.

Twenty-First Century Fox (NASDAQ:FOX) (NASDAQ:FOXA): FOX was a 3.11% of the US long portfolio stake purchased in Q1 2016 at prices between $24 and $28 and increased by ~11% last quarter at prices between $26 and $31. The entire stake was sold this quarter at prices between $24 and $29. The stock currently trades at $27.69.

PPG Industries (NYSE:PPG) and Triumph Group (NYSE:TGI): These are very small (less than ~1% of the portfolio each) stakes that were reduced last quarter and eliminated this quarter.

Stake Increases:

Energy Transfer Partners LP (NYSE:ETP): ETP is currently the largest individual stock position at 9.76% of the portfolio. The original stake is from Q4 2015 at prices between $28 and $47. The following quarter saw a ~200% increase at prices between $20 and $35. Last quarter saw a ~30% selling at prices between $30 and $41. The stock is now at $39.37. This quarter saw a marginal increase.

Goodyear Tire & Rubber (NYSE:GT): GT is a very long-term 0.63% 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. The last four quarters had seen a huge ~93% reduction at prices between $25 and $35. The pattern reversed this quarter: ~21% increase at prices between $25 and $33. The stock currently trades at $30.14.

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. Q2 & Q3 20115 saw a ~27% combined reduction at prices between $73.50 and $95. In Q4 2015, the pattern reversed: ~28% increase at prices between $64 and $79. Last two quarters saw a ~73% combined reduction at prices between $63 and $82. Tepper is harvesting huge gains. The remaining stake is at 2.12% of the portfolio and the stock is at $72.39. This quarter saw marginal buying.

HD Supply Holdings ((NASDAQ:HDS): HDS became a significant presence in the portfolio in Q1 2014 when around 1M shares were purchased for around $23 per share. The original stake more than doubled in Q1 2015 at prices between $27 and $31.50. Q4 2015 saw another ~41% increase at prices between $28 and $32. Last quarter saw a ~17% trimming at prices between $32.50 and $36.50. It currently trades at $38.35. The stake is now at ~2% of the portfolio. There was a very minor increase this quarter.

Kinder Morgan Inc. (NYSE:KMI): KMI is a ~2% portfolio stake first purchased in Q4 2015 at prices between $15 and $32. H1 2016 saw a ~84% reduction at prices between $12 and $19. There was an about-turn this quarter: ~140% increase at prices between $18 and $23. The stock currently goes for $21.67.

Stake Decreases:

Allergan plc (NYSE:AGN): The top-five 6.37% position was established in Q4 2015 at prices between $253 and $323. It was increased by ~86% the following quarter at prices between $266 and $313 and that was followed by a whopping 350% increase last quarter at prices between $202 and $278. The stock is now below those ranges at $192. This quarter saw a very minor reduction.

Allstate Corporation (NYSE:ALL): The top-five ~5 % Allstate stake was established over Q3 and Q4 2015 at prices between $57 and $69. The stock currently trades at $72. This quarter saw a ~7% trimming.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL): GOOG is the second-largest 13F equity stake at 8.33% of the portfolio. It has been a significant presence in the portfolio since Q1 2012 and the original purchase was at prices between $290 and $325. The stake was increased by 87% in Q1 2014 at prices between $550 and $610. Q2 & Q3 2015 saw a combined ~77% reduction at prices between $517 and $673. Q4 2015 saw an about turn: ~240% increase over the last three quarters at prices between $608 and $777. The stock currently trades at $761. This quarter saw a ~25% selling at prices between $692 and $787.

Atlantica Yield plc (NASDAQ:ABY): ABY is a 2.59% portfolio position purchased in Q4 2015 at prices between $14.50 and $21. This year has seen an overall ~5% trimming. The stock is now at $17.86.

General Motors (NYSE:GM): GM was Appaloosa's largest 13F individual stock position at 8.54% of the US long portfolio as of Q4 2015. The bulk of the original stake was purchased in Q1 2012 and Q2 2012 at prices between $21 and $27. Between Q1 2014 and Q1 2015, that stake was more than doubled at prices between $32 and $41. The pattern reversed in Q3 2015: the position was almost sold out over the last five quarters at prices between $28 and $36. It currently trades at $33 and the stake is now minutely small at ~0.13% of the portfolio.

Hain Celestial (NASDAQ:HAIN): HAIN is a small ~1% stake purchased in Q1 2016 at prices between $33.50 and $41.50 and reduced by ~10% last quarter at prices between $41 and $53. The stock currently trades at $38.62. This quarter saw a marginal further reduction.

Huntsman Corporation (NYSE:HUN): HUN is a 2.34% 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 6.3M shares and the stock trades at $19.10. Q1 2015 saw a one-third increase at prices between $21 and $24.50. Last quarter saw a ~16% reduction at prices between $12.50 and $16.50 and that was followed with a ~6% trimming this quarter.

Mohawk Industries (NYSE:MHK): MHK is a 2.63% of the US long portfolio position established in Q1 2016 at prices between $152 and $192 and increased by ~37% last quarter at prices between $178 and $201. This quarter saw a ~24% reduction at prices between $186 and $216. The stock is now at $200. Tepper is starting to harvest gains.

Note: MHK has seen several roundtrips. The last one was a very small stake purchased in Q1 2015 and disposed in Q3 2015.

NXP Semiconductors (NASDAQ:NXPI): NXPI was a top five stake at ~7% of the US long portfolio as of Q3 2015. The original position was from Q3 2014 at prices between $60.50 and $73. The stake saw a ~38% increase in Q3 2015 at prices between $79 and $99. It was sold down by ~65% in the following quarter at prices between $73 and $98. The pattern reversed last quarter: ~81% increase at prices between $64 and $83. The position was almost eliminated this quarter at prices between $76 and $102. The stock currently trades at $98.88.

Note: Last month, Qualcomm agreed to buy NXP Semi at $110 per share.

Owens Corning (NYSE:OC): The original OC stake was established in Q1 & Q2 2012 at prices between $29 and $37. Q4 2014 saw a ~14% reduction at prices between $29 and $36.80 while in Q2 2015 there was a ~22% increase at prices between $38.31 and $43.40. This quarter saw a ~12% trimming at prices between $51 and $55.50. The stake is now at 3.58%. The stock currently trades at $53.59. OC is starting to harvest gains.

Southwest Airlines (NYSE:LUV): LUV is now a very small 0.51% position. It was first purchased in Q3 2015 at prices between $32 and $40.50. The following quarter saw a ~160% increase at prices between $38 and $50. The pattern reversed in Q2 2016: ~87% reduction over the last two quarters at prices between $37 and $48. The stock currently trades at $47.06.

Synchrony Financial (NYSE:SYF): SYF is a 2.65% of the portfolio position established in Q1 2016 at prices between $24.50 and $30.50 and increased by ~21% last quarter at prices between $23 and $32. This quarter saw an almost one-third reduction at prices between $25 and $28.50. The stock is now at $33.62.

Note: The retail unit spinoff from General Electric (NYSE:GE) started trading in July 2014.

Western Digital (NYSE:WDC): WDC is a 1.53% of the portfolio stake established last quarter at prices between $35.50 and $51. It was reduced by ~21% this quarter at prices between $43 and $59. The stock is now at $60.93.

Whirlpool Corporation (NYSE:WHR): WHR is a fairly large ~4.27% of the US long portfolio position. Q1 2014 saw a 125% increase at prices between $127 and $159 and that was followed with a stake doubling in Q3 2014 at prices between $139 and $156. In Q4 2014, the pattern reversed: ~44% reduction over the next two quarters at prices between $140 and $215. In Q4 2015, there was a ~43% increase at prices between $142 and $167. This year has seen a combined ~30% reduction at prices between $127 and $192. The stock currently trades at $161.

WMIH Corp. (NASDAQ:WMIH): WMIH is a very small 0.41% stake that was reduced this quarter. Although the relative position size is very small, it is significant that Tepper owns ~3.5% of the business.

Kept Steady:

TerraForm Power (NASDAQ:TERP): TERP is a 2.75% portfolio stake established in Q4 2015 at prices between $7 and $20. The stock is now at $13.62.

Alps Alerian MLP ETF (NYSEARCA:AMLP) and Williams Partners LP (NYSE:WPZ): AMLP is a very small 1.37% portfolio stake purchased in Q4 2015 at prices between $10.30 and $14.14 and the stock is now at $12.28. WPZ is a top-three 7.83% portfolio position purchased in Q4 2015 at prices between $23 and $35 and the stock currently trades above that range at $36.34.

SPDR S&P 500 ETF & Calls: A huge 9.89% stake in SPY & Calls (mostly Calls) was established in Q4 2015 when the underlying traded between $192 and $211. The position was almost eliminated last quarter when SPY traded between $200 and $212. It currently trades at $219.

Following are the other minutely small stakes in the portfolio: Citigroup Inc. (NYSE:C), Dell Technologies (NYSE:DVMT), Delta Air Lines (NYSE:DAL), Kayne Anderson MLP (NYSE:KYN), SPDR S&P 500 ETF, TerraForm Global (NASDAQ:GLBL) and US Foods Holding (NYSE:USFD). The 13F report also has a minutely small stake in Kinder Morgan Warrants.

Note: US Foods Holding had an IPO in June and the stock currently trades near the IPO price at ~$23.

The spreadsheet below highlights changes to Tepper's US stock holdings in Q3 2016:

Click to enlarge

Disclosure: I am/we are long BAC, GM, KMI, YHOO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.