David Tepper, CEO of Appaloosa Management, is getting cautious about equities, but is finding value in credit.
Appaloosa Management was founded by Tepper in 1993 with a focus on distressed investing. Tepper became a celebrity in 2009, when the fund’s bets on financial stocks took off, earning the fund nearly $7 billion.
According to the latest 13-F filing from Appaloosa Management Tepper sold out of Pfizer, Bank of America, Wells Fargo, Merck, United Health and several other companies.
Tepper seems concerned about financials, which are more volatile and sensitive to slow growth. Tepper sold health-care possibly because of major changes to the health care industry as a result of Patient Protection and Affordable Care Act.
However ,Tepper did buy a 8.64 percent of MF Global equity two days after the firm filed for Bankruptcy protection.
A source close to Appaloosa Management told ValueWalk that David Tepper is very concerned about the current macro environment and is cutting back on risky equities. The source told ValueWalk that Tepper has recently purchased debt of MF Global.
Tepper made a large purchase ( between $40-$60million) of MF Global Bonds at 35 cents on the dollar.
Additionally, David Tepper bought Portugal Telecom bonds yielding 4.5% at $0.25 on the dollar.
Tepper also bought some Energias de Portugal bonds, although the price and yield are unknown.
Tepper bought Bank of Ireland Subordinated debt. The subordinated debt is junior to other types of debt in a bankruptcy case. The bank is now under a lot of financial stress, and Tepper has sued the bank, although it is unclear what the lawsuit is claiming.
As reported last week, David Tepper bought some Commercial mortgage-backed securities (CMBS):
Below are the details.
MSC 07-IQ14 AM 1000/
MSC 07-HQ12 AM 1100/
WBCMT 2007-C30 AM 1025/
WBCMT 2007-C31 AM 1025/
WBCMT 2007-C32 AMFX 1000/
WBCMT 2007-C33 AM 1000/BACM 06-2 AJ 70/
BSCMS 07-PW16 AJ 58/
BSCMS 07-T26 AJ 67/
CSMC 06-C3 AJ 65/
CGCMT 07-C6 AJ 58/
JPMCC 07-CB20 AJ 60/
LBUBS 06-C6 AJ 73/
LBUBS 07-C1 AJ 62/65 1.8MM OFFER
MLCFC 06-1 AJ 72/
MSC 07-T27 AJ 67/
BIDS ARE GOOD FOR 5-10MM
BSCMS 2007-T28 AJ 073945AH0 5x 65/
CD 2007-CD5 AJ 12514AAJ0 5x 67/
CGCMT 2006-C5 AJ 17310MAH3 5x 64/
COMM 2007-C9 AJ 20047RAH6 5×5 76.5/79.5
GSMS 2006-GG8 AJ 362332AH1 5×5 63/66
JPMCC 2007-CB20 AJ 46631QAJ1 TRADED
JPMCC 2007-LD12 AJ 46632HAL5 5×5.588 56/59