Tracking David Tepper's Appaloosa Management Portfolio - Q3 2017 Update

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Includes: AABA, AAPL, AERI, AGN, ALL, ALLY, AMAT, AR, AY, BABA, BAC, BSX, BTU, CBS, CHK, CNC, CX, DAL, DG, ETE, ETP, FB, GM, GOOG, GOOGL, HAIN, HCA, HUN, IBB, KMI, KMT, LB, LUV, MHK, MU, NRG, NUE, OC, PNC, QQQ, RRC, SUM, SYK, TERP, TMO, UNH, URI, WDC, WFC, WHR, WMIH, WPZ, XLF, XPO
by: John Vincent

Summary

David Tepper’s 13F portfolio value increased from $6.74B to $7.12B this quarter.

Micron Technology is the largest individual stock position at ~9% of the portfolio.

Appaloosa increased Micron Technology, Facebook, NRG Energy, and Apple while reducing Allergan plc, Williams Partners LP, and Energy Transfer Partners LP.

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 11/14/2017. 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 2017.

This quarter, Tepper's 13F portfolio value increased ~6% from $6.74B to $7.12B. The number of holdings decreased from 58 to 48. The top-five individual stock positions are Micron Technology (NASDAQ:MU), Alibaba Group Holding (NYSE:BABA), Facebook, Inc. (NASDAQ:FB), Alphabet, Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), and Allergan plc (NYSE:AGN). Combined, they account for ~39% of the 13F holdings.

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

New Stakes:

The Select Sector SPDR Financial ETF (XLF) Calls: The ~3% position in XLF Calls is new. The stock traded between $24 and $26 during the quarter and it currently goes for $26.16.

Stake Disposals:

iShares Nasdaq Biotech ETF (IBB): IBB was a small ~1% portfolio stake established last quarter at prices between $284 and $321 and disposed this quarter at prices between $304 and $336. It is now at $311.

Cemex SAB ADR (CX), Delta Air Lines (DAL), L Brands (LB), Nucor Corp (NUE), and Wells Fargo (WFC): These are very small (less than ~0.67% of the portfolio each) stakes disposed this quarter.

Stake Increases:

Micron Technology: MU is now the largest position at 9.42% of the portfolio. It was established in Q4 2016 at prices between $16.50 and $23.50 and doubled the following quarter at prices between $21.50 and $29. The stake was almost doubled again last quarter at prices between $26.50 and $32.50. There was a one-third further increase this quarter at prices between $27.50 and $39.50. The stock is now at $46.16.

Facebook, Inc.: FB is a large (top three) ~8% of the portfolio stake established in Q3 2016 at prices between $114 and $131 and increased by ~50% the following quarter at prices between $115 and $133. Q1 2017 saw a ~13% trimming at prices between $117 and $143. There was a ~24% increase last quarter at prices between $139 and $155 and that was followed with a ~40% increase this quarter at prices between $148 and $174. The stock currently trades at $179.

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 the following quarter at prices between $109 and $121.

Western Digital (WDC): WDC is a ~3% of the portfolio stake established in Q2 2016 at prices between $35.50 and $51. It was reduced by ~21% the following quarter at prices between $43 and $59. Q1 2017 saw a ~16% increase at prices between $69 and $84 and that was followed with a stake-doubling last quarter at prices between $82 and $94. The stock is now at $91.30. There was a marginal increase this quarter.

Ally Financial (ALLY) and NRG Energy (NRG): These two positions saw large stake increases this quarter. NRG's stake saw a ~575% increase to a ~3% of the portfolio position at prices between $16 and $26. The stock currently trades above that range at $29.49. ALLY's position saw a ~525% increase to a 2.32% portfolio stake at prices between $20.50 and $24.50 and it is now above that range at $26.67.

Apple, Inc. (AAPL): The majority of the ~3% AAPL stake was purchased over the last two quarters at prices between $140 and $164. The stock is now at $170.

UnitedHealth (UNH): UNH is a ~2% portfolio position built this year at prices between $158 and $200 and the stock is currently at $210.

Southwest Airlines (LUV): LUV is now a very small a 0.61% position. It was first purchased in Q3 2015 at prices between $32 and $40.50 and the stake has wavered. Recent activity follow: Q1 2017 saw a ~160% stake increase at prices between $49.50 and $59 while last quarter saw the position reduced by two-thirds at prices between $53 and $62. There was a ~25% stake increase this quarter at prices between $50.50 and $64. The stock currently trades at $54.71.

Boston Scientific (BSX), Centene Corp. (CNC), Energy Transfer Equity (ETE), Kennametal (KMT), Stryker Corp. (SYK), and Thermo Fisher Scientific (TMO): These are small positions (less than ~1.5% of the portfolio each) that saw increases this quarter.

Stake Decreases:

Alibaba Group Holding: BABA is a large (top three) 8.64% of the portfolio stake established in Q1 2017 at prices between $107 and $144 and the stock is now well above that range at $185. There was marginal trimming this quarter.

Alphabet, Inc.: GOOG is a large (top five) 7.65% of the portfolio position. It has been a significant presence in the portfolio since Q1 2012 and the original purchase was at prices between $290 and $325. The position has wavered. Recent activity follow: Q3 2016 saw a 25% selling at prices between $692 and $787 while last quarter saw a ~23% increase at prices between $824 and $984. The stock currently trades at $1,019. There was a very minor ~3% reduction this quarter.

Allergan plc: AGN is a large (top five) 5.44% of the portfolio stake. It was built up over the five quarters through Q4 2016 at prices between $188 and $323. The pattern reversed in Q1 2017: ~30% selling at prices between $210 and $250 and that was followed with another ~15% reduction last quarter at prices between $219 and $249. There was another ~25% selling this quarter at prices between $203 and $256. The stock is now at $175.

Altaba, Inc. (AABA) previously Yahoo: AABA is a fairly large 4.36% of the portfolio position. It was first purchased in Q3 2016 at prices between $37.50 and $44. Q1 2017 saw a ~60% increase at prices between $38.50 and $47 and that was followed with a ~130% increase last quarter at prices between $46 and $56. The stock is now at $71.02. There was a ~9% trimming this quarter.

Williams Partners LP: WPZ is a ~4% portfolio position purchased in Q4 2015 at prices between $23 and $35. There was a ~20% selling this quarter at prices between $37 and $41.50. The stock currently trades at $35.24.

Energy Transfer Partners LP (ETP): ETP is a ~3% of the portfolio position. 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. The pattern reversed in Q2 2016: ~30% selling at prices between $30 and $41. Last quarter saw another reversal: ~24% increase at prices between $18.50 and $24.50. There was a ~20% reduction this quarter at prices between $18 and $21.50. The stock is now at $16.75.

PowerShares QQQ ETF (QQQ): QQQ is a ~3% of the portfolio position purchased last quarter at prices between $130 and $144. This quarter saw a ~20% selling at prices between $136 and $146. The stock currently trades at $154.

Owens Corning (OC): The original OC stake was established in Q1 and Q2 2012 at prices between $29 and $37. Last four quarters saw a combined one-third selling at prices between $46.50 and $78. The stock currently trades at $85.63. Tepper is harvesting gains. The remaining position is at 2.31% of the portfolio.

Huntsman Corporation (HUN): HUN is a ~2% 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. Q1 2015 saw a one-third increase at prices between $21 and $24.50. Last seven quarters have seen a combined ~36% reduction at prices between $8.50 and $28. The stock is now at $30.55.

Allstate Corporation (ALL): The ~2% Allstate stake was established over Q3 and Q4 2015 at prices between $57 and $69. Last four quarters have seen a combined ~53% selling at prices between $66.50 and $94. The stock currently trades at $100.

Bank of America (BAC): BAC is a 2.25% position established in Q1 2017 at prices between $22 and $25.50 and reduced by ~30% this quarter at prices between $22.89 and $25.50. The stock currently trades at $26.62. BAC is a frequently traded stock in Tepper's portfolio.

United Rentals (URI): URI is a 1.82% position built over the last three quarters at prices between $72 and $129. There was a ~20% reduction this quarter at prices between $107 and $139. The stock is now at $150.

PNC Financial (PNC): The 1.75% PNC stake was established in Q3 2016 at prices between $78.50 and $91 and increased by ~220% the following quarter at prices between $88 and $118. This quarter saw the position reduced by half at prices between $121 and $135. The stock is now at $133. Tepper realized gains.

TerraForm Power (TERP): TERP is a 1.59% portfolio stake established in Q4 2015 at prices between $7 and $20. There was marginal trimming this quarter. The stock is now at $12.64.

Atlantica Yield plc (ABY): ABY is a ~1.3% portfolio position purchased in Q4 2015 at prices between $14.50 and $21. Last year saw an overall ~8% trimming and that was followed with a ~20% reduction over the last three quarters. The stock is now at $22.80.

Note: Tepper owns 4.7% of ABY.

Mohawk Industries (MHK): MHK is a 1.10% of the US long portfolio position established in Q1 2016 at prices between $152 and $192 and increased by ~37% the following quarter at prices between $178 and $201. Q3 2016 saw a ~24% reduction at prices between $186 and $216. The stock is now at $272. Last two quarters saw a combined ~50% selling at prices between $228 and $260.

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

Whirlpool Corporation (WHR): WHR is a ~1% of the US long portfolio position. Most of the original stake is from Q1 and Q3 2014 at prices between $127 and $159. Recent activity follow: Last year saw a two-thirds reduction at prices between $128 and $192. YTD has seen another ~45% reduction at prices between $165 and $198. The stock currently trades at $165.

Kinder Morgan, Inc. (KMI): KMI is a ~1% portfolio stake first purchased in Q4 2015 at prices between $15 and $32. The position has wavered since. It was sold down by ~85% in H1 2016 at prices between $12 and $19. The three quarters through Q1 2017 saw a ~250% stake increase at prices between $18 and $23 while last two quarters have seen a ~40% reduction at prices between $18.50 and $21.75. The stock currently goes for $17.01.

CBS Corporation (CBS), Dollar General (DG), General Motors (GM), Hain Celestial (HAIN), and Summit Materials (SUM): These small (less than ~1% of the portfolio each) positions were decreased this quarter.

Note: GM is a frequently traded stock in Tepper's portfolio.

Following are the other minutely small stakes in the portfolio: Aerie Pharmaceuticals (AERI), Antero Resources (AR), Applied Materials (AMAT), Chesapeake Energy (CHK), HCA Healthcare (HCA), Peabody Energy (BTU), Range Resources (RRC), WMIH Corp. (WMIH), and XPO Logistics (XPO).

Note: Tepper has a ~3.6% ownership stake in WMIH.

The spreadsheet below highlights changes to Tepper's US stock holdings in Q3 2017:

David Tepper - Appaloosa Management - Q3 2017 13F Report

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

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.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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