David Tepper’s Appaloosa Management has disclosed its equity portfolio for the reporting period ended March 31 in a new 13F filing with the U.S. Securities and Exchange Commission. Appaloosa has around $20 billion in assets under management, while the value of its equity portfolio stands at around $5.70 billion as of the end of March and its top picks include General Motors Company (NYSE:GM), HCA Holdings Inc (NYSE:HCA), Priceline Group Inc (NASDAQ:PCLN), Goodyear Tire & Rubber Co (NASDAQ:GT) and United Continental Holdings Inc (NYSE:UAL).
David Tepper and Jack Walton founded Appaloosa Management in 1993. David Tepper’s net worth is $10.4 billion and he is the major investor of the fund. Appaloosa Management is only one of the many hedge funds which manage billions of dollars. To manage such big amounts, hedge funds need to spend huge resource budgets and employ best investment experts. Hedge funds charge high commission fees, including approximately 2% fixed fee over total assets and approximately 20% performance fee over the returns of the fund. By following Insider Monkey, individual investors also can invest the stock picks of hedge funds without paying any commission. At Insider Monkey we are closely following more than 700 hedge funds and we supply their stock holdings to our visitors free of charge. Furthermore, we have developed Small-Cap Hedge Fund Strategy on August 2012 to benefit from hedge funds’ best stock picks. This strategy has returned 139% since it was first launched in August 2012, beating the S&P 500 ETF (SPY) by over 80 percentage points (read more details here).
Moving back to Tepper’s latest 13F, we will first discuss his top holding General Motors Company (NYSE:GM), in which he increased his position to 15.30 million shares from 14.68 million shares held previously. The position was valued at $573.61 million at the end of the first quarter. General Motors Company (NYSE:GM)’s net income is on a downward trend. Earnings per share amounted to $4.58 in 2011, $2.92 in 2012, $2.38 in 2013 and $1.65 in 2014. However, analysts are expecting that EPS will grow to $4.49 in 2015 and $5.10 in 2016. The mid-size sedan segment has the largest sales volume in the United States. In this segment, GM has Chevrolet Malibu, which is losing market share with a decline in the sales to 188,519 in 2014 from 200,594 a year earlier. Stronger peers Toyota Camry and Honda Accord, which have yearly sales of approximately 400,000 units, increased their sales by 4.93% and 5.92% respectively between 2013 and 2014. GM’s largest investment for the coming few years is electric vehicles. GM’s goal is to sell 500,000 electric vehicles until the end of 2017. Although the company managed to sell 180,000 of these vehicles so far, it is having some difficulties to deliver this goal due to decline in gas prices projections and high level of competition from Tesla Motors Inc (NASDAQ:TSLA), which plans to start mass production soon, and other producers. Warren Buffett’s Berkshire Hathaway has the largest position in General Motors Company (NYSE:GM) with 41 million shares valued at $1.54 billion as of the end of the first quarter of 2015. In addition, David Einhorn’s Greenlight Capital has initiated a new position of 9.47 million shares valued at $355.05 million during the first quarter of 2015. Greenlight previously held shares of GM, and no re-opened the position, saying that “2015 should be a better year for GM” in its letter to investors for the first quarter.
The second favorite stock pick of Appaloosa Management is HCA Holdings Inc (NYSE:HCA), in which the fund held 4.91 million shares worth $369.12 million, as of the end of the first quarter. HCA Holdings Inc (NYSE:HCA) is a hospital operator and recently disclosed its first quarter 2015 financial results with revenue for the quarter increased to $9.68 billion, compared the revenue of $8.83 billion in the same quarter of the previous year. HCA Holdings Inc (NYSE:HCA)’s first-quarter net income increased to $591.00 million in 2015 from $347.00 million in 2014. The stock advanced by 12.24% year-to-date and by 59.26% in the last 12 months. The aging population is increasing and healthcare is one of the fastest-growing sectors with projected annual spending growth rate of 8% until 2021. HCA is planning to spend $7.70 billion for capacity expansion over the next three years to increase its market share in this growing sector. Stephen Mandel’s Lone Pine Capital and Larry Robbins’ Glenview Capital are other hedge funds that have large positions in HCA Holdings Inc (NYSE:HCA), which contain 5.84 million shares and 5.18 million shares respectively.
Priceline Group Inc (NASDAQ:PCLN) comes in at number three overall in the equity portfolio of the investment manager, who owns 307,974 shares valued at $358.53 million for the reporting period. The Online Reservation Company, which owns three major brands including Booking.com, priceline.com and Agoda.com, has a market cap of $63.25 billion and sports a P/E of 26.48. Priceline Group Inc (NASDAQ:PCLN) recently completed acquisition of PriceMatch which provides user experience data for hotels. Will Snellings’ Marianas Fund Management and Scott Fine and Peter Richards’ Empire Capital Management have initiated new positions in Priceline Group Inc (NASDAQ:PCLN) during the first quarter of 2015.
Goodyear Tire & Rubber Co (NASDAQ:GT) is the fourth-largest stock in Tepper’s equity portfolio. Tepper held 9.99 million shares of the company valued at $270.46 million at the end of first quarter. Tepper increased his position in Goodyear Tire & Rubber Co (NASDAQ:GT) to 22 million shares by purchasing 6.77 million shares during the second quarter of 2013 when the stock was trading between $12.14 and $15.29. He has been unloading his stake since then. Richard Mcguire’s Marcato Capital Management has the largest position in Goodyear Tire & Rubber Co (NASDAQ:GT) with his investment of 10.28 million shares.
United Continental Holdings Inc (NYSE:UAL) is the final pick of Tepper, whose position in the air transport services provider contains 3.97 million shares with a market value of $266.88 million. David Tepper trimmed his position in United Continental Holdings Inc (NYSE:UAL) by 20% during the first quarter. This reduction in the position was a timely move when the stock’s last month loss of 12.6% is considered. Southwest Airlines Co (NYSE:LUV) announced on Tuesday that it is expecting a 3% decline in its passenger revenue per available seat mile in second quarter of 2015 compared to the same quarter in 2014. The announcement send stocks of many major airliners down, including United Continental Holdings Inc (NYSE:UAL) which lost 10.31% on Wednesday. Thomas Claugus’ GMT Capital and Daniel Och’s OZ Management are other major shareholders of the company.
Disclosure: None
