Billionaire David Tepper, the head of Appaloosa Management, recently filed his quarterly 13F report. According to the SEC filings, Appaloosa's value increase by almost 50% in the last quarter of 2017.
$10.5 Billion Portfolio
Stocks in Appaloosa's portfolio which were represented on the 13F filings totaled $10.5 billion as of December 31, 2017. The list value for those stocks was up an astonishing 47.5% as compared with the previous quarter, according to Value Walk.
By comparison, the S&P 500 was up just over 6% over the same period. At a time in which most hedge funds are hoping to catch up with the S&P, Appaloosa is leaving the benchmark index in the dust.
The top seven positions in Appaloosa's stock portfolio make up more than one-half of the fund's total stock assets as indicated by the 13F. Micron stock occupies just under 11% of the total portfolio, with a holding value of more than $1.1 billion.
Facebook stands at 9.3% of the portfolio, with a holding of more than $975 million. QQQ is 8.6% of the portfolio, valued at $903.4 million. Following these top holdings are Apple Inc. (AAPL) and Alibaba Group (BABA), together comprising just under 15% of the total portfolio. (See also: Jana Partners Bought Facebook, Comcast and Teva: 13F Filings.)
To determine whether Appaloosa is likely to post similarly remarkable gains in the quarter to come, Value Walk calculated which stocks in David Tepper's portfolio may be trading below their intrinsic value. Some of these undervalued stocks include Energy Transfer Equity (ETE), Western Digital Corp. (WDC), and HCA Healthcare Inc. (HCA). Micron Technology is also potentially undervalued as well.
Perhaps it comes as little surprise that Tepper is so adept at picking good stocks, considering the billionaire founder of Appaloosa Management has a famous market rally named after him. Tepper bought up distressed financial stocks in early 2009, later cleaning up when those stocks recovered. The investment whiz reportedly earned $7 billion in the process, shooting him to the top-earning hedge fund spot for that year.
Nonetheless, in spite of Tepper's impressive track record, it's important that investors keep in mind the limitations of 13F filings. These documents look backward, and do not necessarily reflect the positions of major investors like Tepper at the time they become available to the public. Making investments based on the decisions a top hedge fund made several months ago is not necessarily a wise financial move. (See also: Billionaire Ray Dalio's Bridgewater Bets Big on ETFs: 13F Filing.)