Tracking David Tepper's Appaloosa Management Portfolio - Q1 2019 Update

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Includes: AABA, ADBE, AGN, ALL, AMLP, AMZN, AY, BABA, BAC, COOP, CRM, CWEN, CZR, ET, FB, GOOG, GOOGL, KMT, LNG, MU, NRG, PCG, TERP, TMUS, UNH, VST, WFC, XLE, XOP
by: John Vincent
Summary

David Tepper’s 13F portfolio value increased from $2.02B to $3.49B this quarter.

Micron Technology is the largest individual stock position at ~23% of the portfolio.

Appaloosa increased the top four positions while also adding Amazon and Alibaba during the quarter.

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 05/15/2019. 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 2018.

This quarter, Tepper’s 13F portfolio value increased ~72% from $2.02B to $3.49B. The number of holdings decreased from 23 to 22. The top-five individual stock positions are Micron Technology, Allergan, PG&E, Facebook, and Amazon. Combined, they account for two-thirds of the 13F holdings. To know more about Tepper's distress investing style, check out the book Distress Investing: Principles and Technique.

Note: It was reported earlier this week that Appaloosa is returning outside money and converting to a Family Office structure.

New Stakes:

Amazon.com (AMZN) and Alibaba Group Holding (BABA): These are two large new positions established this quarter. AMZN is a top five 8.42% of the portfolio position purchased at prices between $1,500 and $1,820 and the stock currently trades just above that range at $1,823. The 5.23% BABA stake was established at prices between $131 and $187 and it is now at $155.

Note: Alibaba is back in the portfolio after a quarter’s gap. It is a frequently traded stock in Tepper’s portfolio.

Salesforce.com (CRM), Adobe Inc. (ADBE), Clearway Energy (CWEN), Energy Select Sector SPDR ETF (XLE), and SPDR S&P Oil & Gas Exploration & Production ETF (XOP): These are very small (less than ~1% of the portfolio each) new stakes established this quarter.

Stake Disposals:

Allstate Corp. (ALL) and Wells Fargo (WFC): ALL was a 2.48% portfolio position purchased last quarter at prices between $77 and $100 and disposed this quarter at prices between $82 and $96. It currently trades at $96.37. WFC was a very small 0.68% portfolio stake purchased last quarter but disposed this quarter.

NRG Energy (NRG): NRG stake saw a ~575% increase in Q3 2017 at prices between $16 and $26. Q1 2018 saw an about turn: ~30% reduction at prices between $24 and $31 and that was followed with a ~62% selling next quarter at prices between $30 and $35. Last quarter saw another ~80% reduction at prices between $35 and $43. The remainder stake was disposed this quarter. The stock is now at $35.53.

Atlantica Yield plc (AY): AY was a 2.90% portfolio position purchased in Q4 2015 at prices between $14.50 and $21. Last two quarters had seen minor trimming and the disposal this quarter was at prices between $17.50 and $20. The stock is now at $21.76.

Bank of America (BAC): The BAC stake was 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 in Q4 2017 at prices between $25 and $30. The position was almost sold out over the last year at prices between $23 and $33 and the remainder stake was disposed this quarter. The stock currently trades at $28.18.

Kennametal (KMT), Platform Specialty Products (PAH), and TerraForm Power (TERP): These small positions (less than ~1% of the portfolio each) saw reductions last quarter and were sold out this quarter.

Stake Increases:

Micron Technology (MU): MU is the largest 13F position at ~23% of the portfolio. The stake was built over the seven quarters through Q2 2018 at prices between $16.50 and $65. The stock is now at $34. Q3 2018 saw an ~11% trimming and that was followed with a ~55% selling last quarter at prices between $29 and $46. There was an about turn this quarter: ~20% stake increase at prices between $29 and $44.

Allergan plc (AGN): AGN is a large (top three) ~13% of the portfolio stake. It was built 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 in Q4 2017: ~85% increase at prices between $164 and $211. The stock is now at ~$136. Q3 2018 saw a ~40% selling at prices between $167 and $193 and that was followed with a similar reduction last quarter at prices between $130 and $194. There was a ~175% stake increase this quarter at prices between $132 and $161.

PG&E Corp. (PCG): PCG is now a large (top five) ~12% portfolio position. It was first purchased in Q4 2017 at prices between $44.50 and $70.75. Last year saw a combined ~500% stake increase at prices between $23 and $49. The stock currently trades well below those ranges at $18.83. There was a ~260% stake increase this quarter at prices between $6.25 and $24.50.

Note: PG&E filed for Chapter 11 bankruptcy protection in January and a few hedge funds stepped in to purchase shares as the stock price crashed.

Facebook Inc. (FB): FB is a large (top five) ~9% 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 the following quarter at prices between $168 and $183. The stock currently trades at ~$181. Q1 2018 saw a ~12% increase while next quarter there was an ~18% reduction. There was another one-third reduction in Q3 2018 at prices between $160 and $218 and that was followed with a ~55% selling last quarter at prices between $123 and $169. This quarter saw a ~40% stake increase at prices between $131 and $173.

Note: FB has had several previous roundtrips in the portfolio: The latest was a 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.

Altaba Inc. (AABA) previously Yahoo: AABA is a ~5% 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 in Q4 2017 at prices between $65 and $73. The stock is now at $61.91. Last year saw a combined ~75% reduction at prices between $55.50 and $81.50. There was a marginal increase this quarter.

Caesars Entertainment (CZR): The 3.42% CZR stake was established in Q4 2017 and more than doubled next quarter at prices between $10.50 and $14.50. Q2 2018 also saw a ~25% increase at prices between $10.50 and $13.20. The stock is currently well below those ranges at $9.02. There was a combined ~15% selling over the last two quarters and that was followed with a minor increase this quarter.

ALPS Alerian MLP ETF (AMLP): The ~2% portfolio stake in AMLP was established last quarter at prices between $8.30 and $11 and it is currently at $9.87. There was a ~6% stake increase this quarter.

Stake Decreases:

Alphabet Inc. (GOOG) (GOOGL): GOOG is a fairly large ~5% 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 2018 saw a ~40% selling at prices between $1,103 and $1,268 and that was followed with a ~25% reduction last quarter at prices between $976 and $1,203. The stock currently trades at $1,133. This quarter saw marginal trimming.

Energy Transfer LP (ET): Energy Transfer Partners merged with Energy Transfer Equity and the resulting entity was renamed Energy Transfer LP. The transaction closed in January and terms were 1.28 shares of ETE for each ETP. Tepper held shares in both and those got converted to ET shares. This quarter saw a ~13% trimming.

T-Mobile US (TMUS): TMUS is a 1.78% of the portfolio position purchased in Q4 2017 at prices between $55 and $64.50 and the stock is currently at $77.27. Q3 2018 saw a one-third selling at prices between $58 and $71 and that was followed with a ~60% reduction last quarter at prices between $60.80 and $70.50. There was a ~13% trimming this quarter.

Vistra Energy (VST): The 1.69% VST position was established in Q2 2018 at prices between $19.50 and $24.50 and increased by ~30% last quarter at prices between $21 and $25.50. The stock currently trades at $24.48. There was an ~11% trimming this quarter.

Mr. Cooper (COOP) previously WMIH: COOP was a very small stake that was almost eliminated in Q2 2018. Next quarter saw the position built back up to a 1.53% portfolio stake at prices between $16 and $20 and the stock is now at $9.23. There was a ~20% selling last quarter at prices between $11.30 and $17 and that was followed with a ~35% reduction this quarter at prices between $9.50 and $15.50.

Note: the prices quoted are adjusted for the 12-for-1 reverse stock-split in October.

Kept Steady:

UnitedHealth (UNH): UNH is a 1.77% portfolio position built during the four quarters through Q1 2018 at prices between $213 and $249. Last three quarters had seen a combined ~65% selling at prices between $217 and $287. The stock is currently at ~$248.

Caesars Entertainment Notes and Cheniere Energy (LNG): These small positions (less than ~1% of the portfolio each) were kept steady this quarter.

The spreadsheet below highlights changes to Tepper’s 13F stock holdings in Q1 2019:

David Tepper - Appaloosa - Q1 2019 13F Report Q/Q Comparison

Disclosure: I am/we are long BABA, 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.