Here's What This Hugely Successful Investor Is Buying
Every quarter, fund managers have to disclose what they've bought and sold. Their latest moves can shine a bright light on smart stock picks.
Today, let's look at Appaloosa Management, founded by investing giant David Tepper and known for investing in the debt of companies in distress. Tepper's investing history includes debt and stock in companies such as Enron and Worldcom. He made billions on bank stocks in 2009 after they had imploded and before they recovered. More recently, he invested in many housing-related companies.
Why should you look at Appaloosa Management's moves? Well, according to the folks at GuruFocus.com, Appaloosa gained a whopping 1,335% in the first decade of this century, compared with just 16% for the S&P 500.
Appaloosa's stock portfolio totaled $765 million in value as of Dec. 31, 2011, with just 29 companies. Its top three holdings, representing 33% of the portfolio's total value, were CVR Energy, Goodyear Tire (NYS: GT) , and Apple (NAS: AAPL) .
So what does Appaloosa's latest quarterly 13F filing tell us? Here are a few interesting details:
Appaloosa had several new stocks this quarter, including Oracle (NAS: ORCL) . My colleague Alex Dumortier has deemed Oracle's shares a bargain for its share buyback program as well as for investors. But others, such as fellow Fool Tim Beyers, worry that rapid-growth years are behind it.
Other than the new buys, the only holding in which Appaloosa significantly upped its stake was Apple, rising by 377%. Apple has been firing on all cylinders for quite a while now and recently passed the half-trillion-dollar mark in market capitalization. Yowza. Some think it should -- and might -- soon unload a chunk of its vast cash hoard in the form of a dividend, while others dream about the big companies it could gobble up.
Goodyear Tire may be one of Appaloosa's top holdings, but it was pared down by 44% over the quarter. The company itself issued some cautious guidance earlier this year, but with the auto industry rebounding, bulls have reason to be hopeful.
Finally, among the stocks that Appaloosa completely sold out of were Micron Technology (NAS: MU) and E*TRADE Financial (NAS: ETFC) . Micron has its advocates, though, especially since a chief rival recently filed for bankruptcy protection. The company had a big shock recently, when its CEO was killed in a plane crash. Meanwhile, E*TRADE has been seeing business improve recently (the improving stock market can only help it), and it has been improving its credit quality, too, as have many banks. An eventual increase in interest rates will boost its prospects, as well.
We should never blindly copy any investor's moves, no matter how talented the investor. But it can be useful to keep an eye on what smart folks are doing. 13F forms can be great places to find intriguing candidates for our portfolios.
It's not too late to look into buying shares of Apple -- or consider some other companies prospering along with it. Check out our special free report "3 Hidden Winners of the iPhone, iPad, and Android Revolution."
At the time this article was published LongtimeFool contributorSelena Maranjian,whom you canfollow on Twitter here, owns shares of Apple, but she holds no other position in any company mentioned.Click hereto see her holdings and a short bio. The Motley Fool owns shares of Apple and Oracle.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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