Below we present the list of the top 5 stocks billionaire David Tepper was buying in Q4. For our methodology and a more comprehensive list please see The Only 10 Stocks Billionaire David Tepper Was Buying in Q4.
5. The Mosaic Company (NYSE:MOS)
Value of Appaloosa Management‘s 13F Position: $94.30 million
Number of Hedge Fund Shareholders: 46
David Tepper’s Appaloosa Management made a modest increase to its position in The Mosaic Company (NYSE:MOS) during Q4, buying 25,000 shares to give it an even 2.4 million. Mosaic has been extremely popular among hedge funds over the past nine quarters, with ownership of the stock more than doubling during that period.
The Mosaic Company (NYSE:MOS) delivered some of its strongest results in years during 2021, pulling in $5.40 in earnings per share, its highest total since 2011, and $3.6 billion in EBITDA. The company’s phosphate segment was a particular strength, with its $1.7 billion in EBITDA being up by 200% year-over-year. Mosaic used its robust earnings to raise its 2022 annual dividend by 50%, the second straight year it’s done so.
Ariel Investments’ Ariel Focus Fund talked about the success The Mosaic Company (NYSE:MOS) had in early 2021 with its core fertilizer business. Check out the fund’s comments from its Q3 2021 investor letter:
“Our third quarter contributors generally fit this “happy family” description. Mosaic Company is the largest contributor to performance this year as well as our biggest holding as we go to print. The company returned +12.20% in the quarter and +56.16% so far this year. We have long believed Mosaic is well positioned to help the world feed its 7 billion people with a better diet amid finite agricultural resources. The company’s nutrients, particularly phosphates and potash, are key to improving yields on the limited number of global acres devoted to farming. Mosaic believes up to 60% of the yield on many crops is determined by the appropriate application of nutrients. For this reason, the company has remained focused on expanding its leadership position in this core fertilizer business. For several years, this concentrated effort did not show results. But in 2021, Mosaic’s focus began to pay off. Strong U.S. crop prices as well as growing transportation costs for imported fertilizer from overseas mines have led to improved earnings expectations. Last December, analysts showed a mean estimate for Mosaic 2021 EPS of $1.43. Today, those same analysts expect the company to earn $4.67! Estimates for 2022 EPS have also increased dramatically from $2.10 as of December 2020 to $4.99 today. We believe Mosaic will also continue to benefit from global inflation.”
4. Energy Transfer L.P. (NYSE:ET)
Value of Appaloosa Management‘s 13F Position: $102 million
Number of Hedge Fund Shareholders: 36
David Tepper hiked his position in Energy Transfer L.P. (NYSE:ET) by 22% during Q4, building his position to 12.39 million shares. Other hedge funds were also taking note of the stock during Q4, as ownership of it jumped by 24% to hit its all-time high.
Energy Transfer L.P. (NYSE:ET), which functions primarily as an oil and natural gas midstream, transportation, and storage company, lowered its dividend in 2020 so it could focus on reducing its debt, which it did to the tune of $.69 billion in 2021. With that heavy lifting out of the way, the company announced a 15% dividend hike in February. Energy Transfer shares currently offer a hefty 6.9% dividend yield.
Miller Value Partners highlighted some of Energy Transfer L.P. (NYSE:ET)’s strong Q1 financial results in its Q2 2021 investor letter:
“Energy Transfer LP (ET)rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Core of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash f low to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
3. EQT Corporation (NYSE:EQT)
Value of Appaloosa Management‘s 13F Position: $107 million
Number of Hedge Fund Shareholders: 46
David Tepper’s hedge fund hiked its position in EQT Corporation (NYSE:EQT) by 71% during Q4, building a position containing 4.89 million shares that ranked as his 13th largest long position as of December 31.
One of the 10 Best LNG Stocks to Buy Now, EQT Corporation (NYSE:EQT) took several steps to improve its long-term trajectory during 2021. Among other things, the company improved its balance sheet, closed on its acquisition of Alta Resources, and instituted a shareholder return plan that includes a quarterly dividend and a $1 billion share buyback authorization. EQT delivered $1.41 billion in adjusted revenue during Q4 alongside $0.41 in adjusted earnings per share, both of which missed estimates by a fair amount.
With oil prices on the rise, natural gas players like EQT Corporation (NYSE:EQT) have fallen somewhat out of favor with investors. Overall hedge fund ownership of the integrated energy company fell by 18% during the quarter.
2. General Motors Company (NYSE:GM)
Value of Appaloosa Management‘s 13F Position: $132 million
Number of Hedge Fund Shareholders: 92
Hedge fund ownership of General Motors Company (NYSE:GM) hit its highest level in over five years during Q4 thanks to an 18% jump in ownership of the stock during the quarter. David Tepper was among those taking a stake in the automaker, buying 2.25 million shares to make GM his ninth-largest holding.
After years of stiff challenges, General Motors Company (NYSE:GM) had a record-breaking year in 2021, earning an all-time of $7.07 in adjusted EPS. That was despite chip shortages limiting North American sales to just 2.3 million vehicles, more than 30% below 2018 levels. With chip supplies now improving, GM expects a big jump in deliveries in 2022, to the tune of 25% to 30%.
RLT Capital laid out some of the pros and cons of General Motors Company (NYSE:GM)’s legacy operations in its Q4 2021 investor letter:
“Despite my enthusiasm for GM’s competitive positioning in the years to come, it’s the decidedly unsexy legacy operations that keep GM’s cash registers ringing in the here and now. On that front, investor enthusiasm for the current manufacturing – and financing – of internal combustion engines remains pretty muted by most measures. And understandably so:
-GM’s operations are capital intensive,
-GM’s marketplace is highly competitive (and with excess capacity to boot),
-GM’s supply chain is super complex (e.g., semi shortage, tariffs, etc),
-GM’s labor force is (very) unionized,
-GM’s liabilities are aplenty and long-dated (e.g., warranties, recalls, lawsuits, etc),
-GM’s operations have ample – and unavoidable – commodity exposure (in both raw materials & the resulting impact on product demand/mix), and
-There’s no shortage of debt to consider.Although that hardly represents a comprehensive accounting of the risks that crowd GM’s disclosures, it’s more than sufficient to obscure the many positives to be found under GM’s hood. Of particular note is GM’s strong showing across seemingly every facet of the changes looming over the broader automotive industry:
-Internal Combustion Engines (ICE): If you think all the talk about electric and/or autonomous vehicles is either total hogwash or still decades into the future . . . GM’s legacy business has you covered. For as long as consumers continue to demand ICE powered vehicles, GM will capably meet said demand. In fact, despite the many headwinds faced by the entire automotive industry in 2021, GM still capably sold ~6.3 million vehicles, and generated ~$113.6 billion of automotive-related revenues…” (Click here to see the full text)
1. Macy’s, Inc. (NYSE:M)
Value of Appaloosa Management‘s 13F Position: $264 million
Number of Hedge Fund Shareholders: 43
Topping the list is another clothing retailer, Macy’s, Inc. (NYSE:M), which David Tepper has owned since the final quarter of 2020. He bought another 3.1 million shares during Q4, building his position to 10.10 million shares and making Macy’s the third-largest holding in his 13F portfolio. Hedge fund ownership of Macy’s has risen by more than 50% since the third quarter of 2020.
Macy’s, Inc. (NYSE:M) had a strong Q4 bolstered by its digital business, which grew sales by 36% compared to the period two years earlier. Digital sales accounted for a record 39% of the company’s total sales in the latest quarter. Macy’s was also a strong free cash flow generator during 2021, topping $2 billion in FCF, which went to reducing the company’s debt and buying back its shares.
ClearBridge Investments’ Small Cap Value Strategy is bullish on the initiatives being undertaken by Macy’s, Inc. (NYSE:M), having this to say about the company in its Q3 2021 investor letter:
“Meanwhile, Macy’s, an omnichannel retail organization that operates stores, websites, and mobile applications under the Macy’s, Bloomingdale’s, and Bluemercury brands, also had a strong quarter (+21.5%). Macy’s delivered strong second-quarter earnings, beating on earnings and revenue and raising guidance as the retailer continues to pay down debt and grow its digital business.”
For more on the latest hedge fund holdings of the biggest hedge fund managers in the world, check out 10 Bank Dividend Stocks to Diversify Your Portfolio and Campbell Wilson’s Old Well Partners Is Buying These 10 Stocks.
