As David Tepper Was Pitching A 20x P/E, He Was Selling (And Buying) These Stocks

As David Tepper Was Pitching A 20x P/E, He Was Selling (And Buying) These Stocks

Tyler Durden on 02/14/2014 18:00 -0500

On October 15, well into the fourth quarter, David Tepper appeared on CNBC for his semi-annual stock pumpfest, most memorable for his suggestion that a 20x P/E multiple on the S&P was perfectly acceptable. Which would suggest Tepper was very bullish on risk. Which would suggest buying more stocks, not selling. Yet selling is precisely what he did between September 30 and December 31 for the vast majority of his top holdings according to his just released 13F. So what did he sell or liquidate?

First, here are his biggest liquidations:

  • US Airways ($178 million, 9.4MM shares)
  • Dow Jones DIA ETF ($151 million, 1MM shares)
  • Hertz ($33 million, 1.5MM shraes)
  • Bank of America ($31 million, 2.2K shares)
  • Sandisk ($25 million, 425K shares)

Just as notable is what he sold in part:

  • Goodyear: sold 6.7MM shares
  • United Continental: sold 2.5MM shares
  • Qualcomm: sold 1.4MM shares
  • Ford: sold 412K shares
  • AIG: sold 254K shares
  • Delta Airlines: sold 2.8MM shares
  • MetLife: sold 1.6MM shares
  • Hartford: sold 1.5MM shares
  • Transocean: sold 890K shares
  • Freeport McMoRan: sold 627K shares
  • EMC: sold 517K shares

And so on – for the full list of companies that didn’t quite buy the 20x P/E thesis see table below.

So what did he buy to offset all these sales? Here are his biggest additions and new positions

  • American Airlines: New – 7MM shares
  • Halliburton: New – 993K shares
  • Eastman Chemical: New – 601K shares
  • Google: added 92K shares, ironically after selling 20k shares in Q3
  • HCA Holdings: added 528K shares
  • Owens Corning: added 554K shares
  • KBR: added 412K shares

However, most notable was the massive addition to his two top holdings: the SPY ETF, which he added $1.5 billion to and had $2.1 billion worth of SPY as of Dec. 31, and the Nasdaq QQQ ETF, which was a $765 billion position as Dec. 31. In other words, of Tepper’s entire $8 billion disclosed long AUM, some 36% was in index tracking ETFs.

It may be a “stock-picker’s market”, but for Tepper it’s all about blunt shotguns.

And finally, for those wondering what Tepper did with that flyer for $6.5 million or 737k shares in JCPenney from Q3 and which got hammered, he sold it.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: