Tracking David Tepper's Appaloosa Management Portfolio - Q1 2018 Update

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Includes: AABA, AAPL, AGN, ALLY, BABA, BAC, EEM, FB, GOOG, LRCX, MGM, MU, NRG, TMUS, UNH, WFC, XLF, XPO
by: John Vincent

Summary

David Tepper’s 13F portfolio value decreased from $10.73B to $9.72B this quarter.

Micron Technology is the largest individual stock position at ~19% of the portfolio.

Appaloosa increased Micron Technology and MGM Resorts while dropping Apple.

This article is part of a series that provides an ongoing analysis of the changes made to David Tepper’s 13F portfolio on a quarterly basis. It is based on Appaloosa Management’s regulatory 13F Form filed on 05/15/2018. 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 Q4 2017.

This quarter, Tepper’s 13F portfolio value decreased ~10% from $10.73B to $9.72B. The number of holdings increased from 50 to 53. The top-five individual stock positions are Micron Technology, Facebook Inc., Alibaba Group Holding, Allergan, and Altaba. Combined, they account for ~50% of the 13F holdings.

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

New Stakes:

Lam Research (NASDAQ:LRCX), Wells Fargo (NYSE:WFC), UBS Group AG (NYSE:UBS), Applied Materials (NASDAQ:AMAT), and VanEck Vectors Semiconductor ETF (NYSEARCA:SMH): LRCX is a medium-sized 2.71% of the portfolio stake established this quarter at prices between $162 and $229 and the stock currently trades at ~$196. The 1.58% WFC position was purchased at prices between $51 and $66 and it is now near the low end of that range at $53.70. UBS is a 1.26% portfolio stake established at prices between $17 and $21 and it currently trades below that range at $15.97. AMAT and SMH are very small (less than 1% of the portfolio each) stakes purchased this quarter.

ALPS Alerian MLP ETF (NYSEARCA:AMLP), Knight-Swift Transportation (NYSE:KNX), Boyd Gaming (NYSE:BYD), Platform Specialty Products (NYSE:PAH), United Continental (NASDAQ:UAL), and Nvidia Corp. (NASDAQ:NVDA): These are minutely small (less than ~0.5% of the portfolio each) positions established this quarter.

Stake Disposals:

Apple Inc. (NASDAQ:AAPL): AAPL was a very large (top five) ~7% of the portfolio stake as of last quarter. The position was built during Q2 and Q3 2017 at prices between $140 and $164. Last quarter saw a huge ~240% stake increase at prices between $153 and $177. The stake was sold this quarter at prices between $155 and $182. The stock is now at ~$186.

Mohawk Industries (NYSE:MHK): The original MHK stake was 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. Last three quarters had seen a combined ~88% selling at prices between $225 and $285. The remaining minutely small 0.18% portfolio position was disposed this quarter. The stock is now at $216.

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

iShares MSCI Emerging Markets ETF (NYSEARCA:EEM): EEM was a large (top three) stake established last quarter at prices between $44.50 and $48. It was sold this quarter at prices between $45.50 and $52. The stock is now at $46.07.

Comcast Corp. (NASDAQ:CMCSA), CSX Corporation (NYSE:CSX), Southwest Airlines (NYSE:LUV), and Vistra Energy (NYSE:VST): These are very small (less than ~1% of the portfolio each) positions disposed this quarter. CMCSA, CSX, and VST stakes were established last quarter. LUV position was from Q3 2015 and had wavered since.

Stake Increases:

Micron Technology (NASDAQ:MU): MU is the largest 13F position at 19% of the portfolio. The stake was built over the last six quarters at prices between $17 and $61. The stock is now at $53.39.

Facebook Inc. (NASDAQ:FB): FB is a large (top three) ~10% 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. Q3 2017 saw a ~40% increase at prices between $148 and $174 and that was followed with a two-thirds increase last quarter at prices between $168 and $183. The stock currently trades at $183. This quarter also saw a ~12% increase.

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.

Allergan plc (NYSE:AGN): AGN is a large 6.41% 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 the following quarter at prices between $219 and $249. There was another ~25% selling in Q3 2017 at prices between $203 and $256. The pattern reversed again last quarter: ~85% increase at prices between $164 and $211. The stock is now at $158. There was a ~7% increase this quarter. For investors attempting to follow Tepper, AGN is a good option to consider for further research.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL): GOOG is a 4.31% 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 stake has wavered. Recent activity follow: Q3 2016 saw a 25% selling at prices between $692 and $787 while Q2 2017 saw a ~23% increase at prices between $824 and $984. Last quarter saw a ~37% reduction at prices between $952 and $1077 while this quarter there was a ~14% increase. The stock currently trades at $1066.

T-Mobile US (NASDAQ:TMUS): TMUS is a 2.61% of the portfolio position purchased last quarter at prices between $55 and $64.50 and the stock is currently at $56.93. There was an ~8% stake increase this quarter.

UnitedHealth (NYSE:UNH): UNH is a 1.56% portfolio position built during the first three quarters of 2017 at prices between $158 and $200. The stock is currently at ~$245. There was an ~11% trimming last quarter while this quarter saw a ~19% increase.

Caesars Entertainment (NASDAQ:CZR) and MGM Resorts International (NYSE:MGM): These two ~1.5% portfolio positions were established last quarter and increased substantially this quarter. The CZR stake was more than doubled at prices between $10.50 and $14.50 and it is now at $12.85. The MGM position was increased by ~75% at prices between $33 and $38 and it currently trades just below that range at $32.34.

Centene Corp (NYSE:CNC) and Thermo Fisher Scientific (NYSE:TMO): These two small ~1.3% stakes were decreased last quarter but saw increases this quarter. CNC position was increased by ~60% at prices between $99 and $112 and it is now at ~$115. The TMO positon saw a minor ~5% increase.

Owens Corning (NYSE:OC): The original OC stake was established in Q1 and Q2 2012 at prices between $29 and $37. Last five quarters had seen a combined two-thirds selling at prices between $46.50 and $92. The pattern reversed this quarter: ~45% stake increase at prices between $77.50 and $96. The stock currently trades at $66. The position is now at 1.17% of the portfolio.

Atlantica Yield plc (NASDAQ:AY): AY is a ~0.77% portfolio position purchased in Q4 2015 at prices between $14.50 and $21. 2016 saw an overall ~8% trimming and that was followed with a ~40% reduction last year. The stock is now at $19.60. There was a ~8% increase this quarter.

Note: Tepper owns ~3.8% of ABY.

Cheniere Energy (NYSEMKT:LNG), Dollar General (NYSE:DG), Energy Transfer Equity (ETE), Huntsman Corporation (NYSE:HUN), Kennametal (NYSE:KMT), PG&E Corp. (NYSE:PCG), Peabody Energy pfd Cnvrts, and Venator Materials plc (NYSE:VNTR): These small positions (less than ~1% of the portfolio each) saw increases this quarter.

Stake Decreases:

Alibaba Group Holding (NYSE:BABA): BABA is a large (top five) 7.68% of the portfolio stake established in Q1 2017 at prices between $107 and $144. There was a ~20% increase last quarter at prices between $170 and $191 and the stock currently trades at $195. This quarter saw a ~6% trimming.

Altaba Inc. (NASDAQ:AABA) previously Yahoo: AABA is a large ~6% 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 in the following quarter at prices between $46 and $56. There was a ~90% increase last quarter at prices between $65 and $73. The stock is now at $75.93. This quarter saw a ~10% trimming.

Bank of America (NYSE:BAC): BAC is a 4.72% position established in Q1 2017 at prices between $22 and $25.50 and reduced by ~30% in Q3 2017 at prices between $22.89 and $25.50. There was a ~170% stake increase last quarter at prices between $25 and $30 and that was followed with a ~36% reduction this quarter at prices between $29 and $33. The stock currently trades at $30.26. BAC is a frequently traded stock in Tepper’s portfolio.

XPO Logistics (NYSEMKT:XPO): XPO was a minutely small stake in Q3 2017. The position was built up to a ~2% of the portfolio position last quarter at prices between $64.50 and $92. The stock is now at ~$108. There was a ~3% trimming this quarter.

NRG Energy (NYSE:NRG) and Ally Financial (NYSE:ALLY): These two positions had seen large stake increases in Q3 2017. NRG stake saw a ~575% increase at prices between $16 and $26 while ALLY position saw a ~525% increase at prices between $20.50 and $24.50. The NRG position was reduced by ~30% this quarter at prices between $24 and $31 and it is now at $33.71. The ALLY position saw marginal trimming this quarter. Both are ~2% portfolio stakes.

PowerShares QQQ Trust ETF (NASDAQ:QQQ): QQQ was a large (top three) 8.42% of the portfolio position purchased in Q2 2017 at prices between $130 and $144. The following quarter saw a ~20% selling at prices between $136 and $146 while last quarter saw a ~300% stake increase at prices between $145 and $159. The zigzag trading continued this quarter: ~87% selling at prices between $154 and $174. QQQ currently trades at ~$168 and the stake is now very small at 1.27% of the portfolio.

Energy Transfer Partners LP (ETP): ETP is a 1.12% 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. Q2 2017 saw another reversal: ~24% increase at prices between $18.50 and $24.50. Last three quarters saw a ~55% reduction at prices between $15.50 and $21.50. The stock is now at $18.98.

Boston Scientific (NYSE:BSX) and Summit Materials (NYSE:SUM): These small positions (less than ~1% of the portfolio each) saw reductions this quarter. BSX was reduced by ~18% while SUM stake saw a minor ~2% trimming.

Williams Partners LP (NYSE:WPZ): WPZ is now a small ~1% portfolio position. It was first purchased in Q4 2015 at prices between $23 and $35. There was a ~70% selling over the last three quarters at prices between $35 and $43.50. The stock currently trades at $41.23.

Financial Select Sector SPDR ETF (NYSEARCA:XLF) Calls, Energy Select Sector SPDR ETF (NYSEARCA:XLE) Calls, and SPDR S&P Oil & Gas Exploration & Production ETF (NYSEARCA:XOP) Calls: A ~3% position in XLF Calls was established in Q3 2017 when XLF traded between $24 and $26. Last quarter saw a ~40% increase as XLF traded between $26 and $28. It currently goes for $27.95. The position was almost sold out this quarter as the underlying traded between $27 and $30. XLE and XOP Calls were very small stakes that saw ~75% reductions this quarter.

United Rentals (NYSE:URI): URI was a 1.22% position as of last quarter. The original stake was built over the three quarters through Q2 2017 at prices between $72 and $129. There was a ~20% reduction in Q3 2017 at prices between $107 and $139 and that was followed with a similar selling last quarter at prices between $139 and $173. The stock is now at $170. The position was almost sold out this quarter at prices between $162 and $189.

Allstate Corporation (NYSE:ALL), HCA Holdings (NYSE:HCA), TerraForm Power (NASDAQ:TERP), Western Digital (NYSE:WDC), and WMIH Corp. (WMIH): These are small positions (less than ~1% of the portfolio each) that saw reductions this quarter.

Kept Steady:

Stryker Corp. (NYSE:SYK) and Caesars Entertainment Notes: These are small positions (less than ~1% of the portfolio each) kept steady this quarter.

The spreadsheet below highlights changes to Tepper’s US stock holdings in Q1 2018:

David Tepper - Appaloosa - Q1 2018 13F Report

Disclosure: I am/we are long AGN, BAC, LNG.

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.