Billionaire David Tepper’s Biggest Q2 Moves Involve Western Digital, Facebook & Others

Appaloosa Management LP is a Florida-based employee-owned hedge fund firm co-founded by well-known billionaire David Tepper in 1993. Mr. Tepper and his firm made news headlines earlier this year, after the billionaire money manager moved his residence and firm Appaloosa Management from northern New Jersey to Miami Beach. Mr. Tepper’s decision to quit New Jersey for tax-friendly Florida was seen as a massive tax blow to the Garden State.

Appaloosa Management LP managed to impress investors and stock market participants with its performance in 2015, when most hedge fund vehicles lost a great deal of money. The firm’s Palomino fund generated a net-of-fees return of 11% in 2015, while its smaller Thoroughbred fund returned approximately 7%. David Tepper and his firm attracted a lot of attention in 2009, when he became the highest-paid hedge fund manager of that year after rewarding his investors with an impressive net-of-fees return of 120%. According to the latest round of 13Fs, Appaloosa Management LP operates a portfolio worth $3.80 billion as of the end of the second quarter, which is significantly smaller than the $5.66 billion-portfolio recorded at the end of the first quarter as the firm trimmed exposure to U.S. equities. Without further delay, let’s summarize the Florida-based asset manager’s major moves completed during the June quarter.

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Appaloosa Management Sells Out Entire Facebook Inc. (NASDAQ:FB) Stake

Appaloosa Management LP sold out its entire 1.63 million-share stake in Facebook Inc. (NASDAQ:FB) during the second quarter of 2016. The Facebook stake was the tenth-largest position in the asset manager’s set of holdings at the end of the first quarter, accounting for 3.3% of the firm’s portfolio. Just recently, the world’s largest social network found a way to block the ad blockers. This move enables Facebook to serve ads on its desktop site even to the group of people that has ad-blocking software installed. However, Adblock Plus, the most well-known and prominent ad-blocking software maker, already knows how to stop the anti-ad-blocking technique implemented by the Silicon Valley company. Facebook executives recently said that ad blockers took an “all or nothing approach”, while Facebook was trying to find a “middle ground” by enabling users to identify which ads they do not like as well as tell the site the kind of ads that would interest them. Facebook shares have gained 19% since the start of the year. Ken Griffin’s Citadel Advisors LLC owns 4.57 million shares of Facebook Inc. (NASDAQ:FB) as of June 30.

Appaloosa Management Discards Delta Air Lines Inc. (NYSE:DAL) Stake

The Florida-based hedge fund firm also discarded its entire stake of 8.59 million shares of Delta Air Lines Inc. (NYSE:DAL) during the April-to-June period. The position was worth $418.40 million at the end of March, representing the fourth-largest holding in Appaloosa Management’s portfolio. The second-largest U.S. airline by traffic has seen the value of its stock plunge by 28% since the beginning of the year. A little while ago, Delta Air Lines revealed that its passenger unit revenue, an important metric in the airline industry, declined by 7% in July. The carrier was said to be on track to stop its months-long decline in passenger unit revenue, but a fresh power outage that hit the company’s computer systems will make it much harder for Delta to reverse the trend of this highly-scrutinized measure in the foreseeable future. As a result of the internal electrical outage, the company was forced to cancel more than 2,000 flights, overturning thousands of travelers’ plans as thousands more flights were delayed. Iridian Asset Management, founded by David Cohen and Harold Levy, reported ownership of 10.32 million shares of Delta Air Lines Inc. (NYSE:DAL) through the latest round of 13Fs.

The second page of the article will reveal three other major moves completed by Appaloosa Management LP during the second quarter.

David Tepper Buys New Stake in Western Digital Corp (NASDAQ:WDC)

– Shares Owned by Appaloosa Management LP (as of June 30): 1.45 Million

– Value of Appaloosa Management LP’s Holding (as of June 30): $68.53 Million

David Tepper’s investment firm acquired a new stake of 1.45 million shares of Western Digital Corp (NASDAQ:WDC) during the three months that ended June 30, valued at $68.53 million at the end of the period. The new position accounted for 1.8% of the asset manager’s overall portfolio. Earlier this year, the manufacturer of data storage solutions completed the acquisition of flash memory technology maker SanDisk Corporation, with the multi-billion-dollar cash-and-stock deal considered as being crucial to Western Digital. The acquirer’s core business involved selling platter-based hard disk drives, a market pressured by tough competition from makers of solid-state drives (SSDs). As a result, the acquisition increased the acquirer’s market share in the SSD market to around 14%, making Western Digital the second-largest player in the industry after Samsung. Under the terms of the merger that was completed on May 12, SanDisk shareholders received $67.50 per share in cash and 0.2387 shares of Western Digital. WDC shares are 26% in the red year-to-date. John Brennan’s Sirios Capital Management has 1.27 million shares of Western Digital Corp (NASDAQ:WDC) in its portfolio as of the end of the second quarter.

Appaloosa Management Cut Stake in HCA Holdings Inc. (NYSE:HCA)

– Shares Owned by Appaloosa Management LP (as of June 30): 1.22 Million

– Value of Appaloosa Management LP’s Holding (as of June 30): $93.72 Million

The hedge fund based in Miami Beach reduced its exposure to HCA Holdings Inc. (NYSE:HCA) by 1.96 million shares during the April-to-June period, finishing the second quarter with 1.22 million shares valued at $93.72 million. The trimmed stake made up for 2.5% of the hedge fund’s entire portfolio. The private hospital operator should benefit from the possible election of Hillary Clinton as the next president of the United States, as she has promised to protect and expand the so-called Obamacare, or the Affordable Care Act (ACA). HCA Holdings has benefited from the expansion of health insurance under Obamacare, which resulted in increased patient admissions and reductions in unpaid bills. The largest hospital operator in the U.S. reported revenues of $10.32 billion for the second quarter, up 4.3% year-over-year. The company’s same facility admissions for the second quarter grew 0.6% year-on-year. HCA shares are 13% in the green thus far in 2016. Anthony Bozza’s Lakewood Capital Management was the owner of 2.16 million shares of HCA Holdings Inc. (NYSE:HCA) at the end of June.

Billionaire David Tepper Boosts Allergan plc (NYSE:AGN) Stake

– Shares Owned by Appaloosa Management LP (as of June 30): 1.26 Million

– Value of Appaloosa Management LP’s Holding (as of June 30): $291.36 Million

Appaloosa Management LP added 981,700 shares of Allergan plc (NYSE:AGN) to its existing position in the company during the second quarter of 2016, ending the three-month period with 1.26 million shares. The upped position was worth $291.36 million on June 30 and made up 7.7% of the hedge fund’s portfolio. The Allergan stake was the fourth-largest position in Appaloosa Management’s set of holdings at the end of June. Allergan, previously known as Actavis until the company bought Botox maker Allergan, has seen its market cap decline by 20% since the start of the year. Although fresh media reports suggested Allergan was interested in acquiring biotechnology giant Biogen Inc. (NASDAQ:BIIB), the company’s CEO dismissed rumors of a possible bid to acquire Biogen during a freshly-held conference call, saying that the company does not need a “transformational” deal to fuel growth. Just recently, Allergan agreed to acquire ForSight VISION5, a privately-held biotechnology company focused on eye care. Dan Loeb’s Third Point LLC owns 4.90 million shares of Allergan plc (NYSE:AGN) as of June 30.

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