Bloomberg had an article today about the sub-par performance of financial stocks in 2011. Here is what attracted our attention in the article:
“David Tepper, founder of hedge fund Appaloosa Management LP, used his investments in the largest banks that year to drive a 132 percent return in 2009, making his fund the best performer among those with more than $1 billion in assets.
This time around, Tepper, 53, isn’t as bullish. Appaloosa cut its stakes in five banks — Citigroup, Wells Fargo, Bank of America, Fifth Third Bancorp and SunTrust Banks Inc. — in the first quarter by an average of 43 percent.
“I wish it was 80 percent, because they’ve been absolute crap since we sold them,” said Tepper, whose fund is based in Short Hills, New Jersey. “So we were 40 percent right.”
Was David Tepper really 40% right on banks?
Bloomberg’s article has some missing information about David Tepper‘s transactions. Tepper’s moves in financials give a better picture than what he did with just those 5 stocks mentioned. During the first quarter David Tepper sold his entire stakes in JP Morgan Chase (JPM), Wells Fargo’s preferred conv. shares (WFC) (this was worth $336 Million at the end of December), BB&T (BBT), Capital One Financial (COF), Flagstar Bancorp (FBC), and some classes of RBS. On the other hand he initiated a brand new $67 Million position in Metlife (MET). Here is the complete list of his activity in financial shares:
| CompanyName | Ticker | Value (Mar 31st) | Shares (Mar 31st) | Activity | Value (Dec 31st) | Shares (Dec 31st) |
| B B & T CORP | BBT | Sold Out | 10975 | 417441 | ||
| CAPITAL ONE FINANCIAL | COF | Sold Out | 43667 | 1026009 | ||
| CAPITAL ONE FINANCIAL | COF | Sold Out | 2043 | 126759 | ||
| FLAGSTAR BANCORP I | FBC | Sold Out | 4972 | 3050000 | ||
| GRAMERCY CAPITAL | GKK | Sold Out | 914 | 395791 | ||
| JPMORGAN CHASE & CO | JPM | Sold Out | 22937 | 540704 | ||
| ROYAL BANK SCOTLAND | RBS | Sold Out | 700 | 32223 | ||
| ROYAL BANK SCOTLAND | RBS | Sold Out | 1240 | 58708 | ||
| STRATEGIC HOTELS | BEE | Sold Out | 300 | 56738 | ||
| WELLS FARGO & CO NEW | WFC | Sold Out | 335667 | 335482 | ||
| WILLIS GROUP HOLDINGS | WSH | Sold Out | 13532 | 390770 | ||
| NEWCASTLE INVESTMENT | NCT | 3299 | 546192 | -77% | 16249 | 2425156 |
| SUNTRUST BANKS INC | STI | 42132 | 1460899 | -65% | 123738 | 4193090 |
| FIFTH THIRD BANCORP | FITB | 45887 | 3306006 | -65% | 138946 | 9465006 |
| WELLS FARGO & CO NEW | WFC | 98002 | 3091560 | -59% | 231188 | 7460100 |
| CITIGROUP INC | C | 338647 | 76616856 | -35% | 555781 | 117501357 |
| BANK OF AMERICA CORP | BAC | 229487 | 17215849 | -31% | 334401 | 25067544 |
| HARTFORD FINANCIAL | HIG | 25500 | 946917 | -28% | 34623 | 1307035 |
| BANCO SANTANDER S A | STD | 6917 | 590206 | -5% | 6644 | 623810 |
| E TRADE FINANCIAL | ETFC | 66630 | 43944000 | -5% | 71814 | 46257000 |
| HARTFORD FINANCIAL | HIG | 25254 | 1377000 | 0% | 24970 | 1383400 |
| ROYAL BANK SCOTLAND | RBS | 39909 | 2028914 | 0% | 32787 | 2028914 |
| ROYAL BANK SCOTLAND | RBS | 35054 | 2001914 | 0% | 29708 | 2001914 |
| ROYAL BANK SCOTLAND | RBS | 81 | 4889 | 0% | 71 | 4889 |
| ROYAL BANK SCOTLAND | RBS | 28891 | 1609519 | 0% | 24191 | 1609519 |
| ROYAL BANK SCOTLAND | RBS | 40 | 2400 | 0% | 35 | 2400 |
| ROYAL BANK SCOTLAND | RBS | 57163 | 3360579 | 0% | 48896 | 3360579 |
| ROYAL BANK SCOTLAND | RBS | 35377 | 1861961 | 0% | 32454 | 1861961 |
| ROYAL BANK SCOTLAND | RBS | 26858 | 1560596 | 0% | 22894 | 1560596 |
| METLIFE INC | MET | 67095 | 1500000 | New |
David Tepper‘s total position in financial shares was $2.167 Billion at the end of 2010. He had $1.172 Billion invested in financial shares at the end of March. Financial stocks didn’t lose that much during the first quarter (the losses intensified during the past couple of months), so we can say that David Tepper was more like 46% right about financial stocks during the first quarter.
