Tracking David Tepper’s Appaloosa Management Portfolio – Q4 2019 Update

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 02/14/2020. 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 Q3 2019.

This quarter, Tepper’s 13F portfolio value increased from $3.41B to $3.98B. The number of holdings decreased from 24 to 22. The top five positions are Alphabet, Facebook, Amazon, Alibaba Group Holdings, and Micron Technology. They add up to two-thirds of the portfolio. To know more about Tepper’s distress investing style, check out the book Distress Investing: Principles and Technique.

Note: It was reported last May that Appaloosa is returning outside money and converting to a Family Office structure.

New Stakes:

Intelsat SA (I) and Broadcom convertible preferreds: These two are the new positions this quarter. The 0.51% of the portfolio Intelsat stake was purchased at prices between $5.95 and $27 and the stock currently trades well below that range at $4.50. The Broadcom convertible preferreds are a minutely small 0.07% position.

Note: Regulatory filings last week indicate Tepper owning 10.45M shares (7.4% of business) of Intelsat SA. This is compared to 2.89M shares in the 13F report. The stock spiked following this disclosure. Tepper has also urged the company’s board to file for bankruptcy and challenge the FCC plan to clear C-band spectrum for 5G.

Stake Disposals:

Altaba Inc. previously Yahoo: Altaba was an ~8% 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 $69.53. Last year saw a combined ~75% reduction at prices between $55.50 and $81.50. There was a marginal increase in Q1 2019 and that was followed with a ~55% selling last quarter at prices between $59 and $79. Last quarter saw a ~14x stake increase. Altaba shareholders received a pre-dissolution liquidating distribution of $51.50 in cash per share in September. The stock is no longer traded.

Boeing Company (BA), Mr. Cooper (COOP) previously WMIH, Humana Inc. (HUM), and SPDR S&P Oil & Gas (XOP): These small positions (less than ~1% of the portfolio each) were disposed during the quarter.

Stake Increases:

Amazon.com (AMZN): AMZN is a top three 13.53% of the portfolio position purchased in Q1 2019 at prices between $1,500 and $1,820. Last three quarters have seen a ~75% stake increase at prices between $1,690 and $2,020. The stock currently trades at ~$2,096.

Alibaba Group Holdings (BABA): BABA is a large (top five) 12.79% of the portfolio position established last quarter at prices between $154 and $183 and increased by ~85% this quarter at prices between $162 and $217. The stock currently trades at ~$213.

Note: Alibaba is a frequently traded stock in Tepper’s portfolio. The most recent round-trip follow: a 5.23% BABA stake was established in Q1 2019 at prices between $131 and $187 and disposed next quarter at prices between $149 and $195.

Micron Technology (MU): The current 7.53% top five MU stake was built last quarter at prices between $39.50 and $51. There was a one-third stake increase this quarter at prices between $42 and $55.50. The stock currently trades at ~$57.

Note: MU is a frequently traded stock in Tepper’s portfolio. It was the largest position as of Q1 2019. The stake was built over the seven quarters through Q2 2018 at prices between $16.50 and $65. Q3 2018 saw an ~11% trimming and that was followed with a ~55% selling next quarter at prices between $29 and $46. Q2 2019 saw the position reduced to a minutely small 0.38% stake at prices between $31 and $44.

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. H1 2019 had seen a ~24% selling while last quarter saw a marginal increase. There was a stake doubling to a 3.62% portfolio stake this quarter at prices between $11 and $13. The stock is now at $12.14.

UnitedHealth (UNH): UNH is a 2.22% portfolio position built during the four quarters through Q1 2018 at prices between $213 and $249. Last three quarters of 2018 had seen a combined ~65% selling at prices between $217 and $287. There was a one-third increase in Q2 2019 at prices between $217 and $252 while last quarter saw a ~25% selling at prices between $215 and $267. The zig-zag trading pattern continued this quarter: ~20% stake increase at prices between $215 and $296. The stock is currently at ~$301.

Adobe Inc. (ADBE): ADBE is a ~2% of the portfolio position that saw an ~80% stake increase last quarter at prices between $273 and $311. The stock currently trades well above that range at $373. This quarter saw a ~17% further increase.

Stake Decreases:

Alphabet Inc. (GOOG) (GOOGL): GOOG is currently the largest position at 14.78% 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 has wavered. Recent activity follows: Q3 2018 saw a ~40% selling at prices between $1,103 and $1,268 and that was followed with a ~25% reduction next quarter at prices between $976 and $1,203. Q2 2019 saw a ~50% stake increase at prices between $1,036 and $1,288. That was followed with a stake doubling last quarter at prices between $1,098 and $1,250. The stock currently trades at ~$1,485. This quarter saw marginal trimming.

PG&E Corp. (PCG): PCG is a 4.75% of the portfolio position. It was first purchased in Q4 2017 at prices between $44.50 and $70.75. Next year saw a combined ~500% stake increase at prices between $23 and $49. The stock currently trades well below those ranges at $17.92. There was a ~260% stake increase in Q1 2019 at prices between $6.25 and $24.50 and that was followed with a ~28% selling next quarter at prices between $17 and $24. Since then, the activity has been minor.

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.

Caesars Entertainment (CZR): The 3.43% 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 at ~$14.50. There was a combined ~15% selling in H2 2018 and that was followed with a minor increase in Q1 2019. Q2 2019 saw a ~20% reduction and that was followed with a ~10% trimming this quarter.

Note: Eldorado Resorts (ERI) is buying Caesars in a cash-and-stock deal announced last June ($8.40 cash and 0.0899 ERI shares for each share of CZR held).

Broadcom Inc. (AVGO): AVGO is a 2.18% of the portfolio stake purchased last quarter at prices between $266 and $304 and the stock is currently at ~$305. There was marginal trimming this quarter.

Clearway Energy (CWEN): The minutely small 0.29% stake in Clearway Energy saw a ~25% selling during the quarter.

Kept Steady:

Facebook Inc. (FB): FB is a top-three 14.57% 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. H2 2017 saw a stake doubling at prices between $148 and $183. The position has since wavered. There was a one-third reduction in Q3 2018 at prices between $160 and $218 and that was followed with a ~55% selling next quarter at prices between $123 and $169. Q1 2019 saw a ~40% stake increase at prices between $131 and $173. That was followed with a ~50% stake increase last quarter at prices between $177 and $205. The stock is currently at $210.

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.

Allergan plc (AGN): AGN is a large 6.22% 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. Q3 2018 saw a ~40% selling at prices between $167 and $193 and that was followed with a similar reduction next quarter at prices between $130 and $194. There was a ~175% stake increase in Q1 2019 at prices between $132 and $161. That was followed with a ~60% selling next quarter at prices between $116 and $168. The stock currently trades at ~$200.

Note: AbbVie (ABBV) is buying Allergan in a cash-and-stock deal ($120.30 cash and 0.866 shares of ABBV for each share of AGN held) announced last June.

ALPS Alerian MLP ETF (AMLP): The ~1.40% portfolio stake in AMLP was established in Q4 2018 at prices between $8.30 and $11 and it currently trades below that range at $7.65. There was a ~6% stake increase in Q1 2019 while last quarter saw a ~13% trimming.

T-Mobile US (TMUS): TMUS is a 1.38% of the portfolio position purchased in Q4 2017 at prices between $55 and $64.50 and the stock is currently at $98.57. Q3 2018 saw a one-third selling at prices between $58 and $71 and that was followed with a ~60% reduction next quarter at prices between $60.80 and $70.50. H1 2019 had seen another one-third selling at prices between $65 and $78.

Vistra Energy (VST): The ~1% VST position was established in Q2 2018 at prices between $19.50 and $24.50 and increased by ~30% in Q4 2018 at prices between $21 and $25.50. H1 2019 had seen a one-third selling at prices between $22 and $27. The stock currently trades at $23.43.

Caesars Entertainment Notes, Cheniere Energy (LNG), Humana Inc. (HUM), and Salesforce.com (CRM): These small positions (less than ~1% of the portfolio each) were kept steady during the quarter.

The spreadsheet below highlights changes to Tepper’s 13F stock holdings in Q4 2019:

Disclosure: I am/we are long ABBV, AGN, AMZN. 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.

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