It's so important to learn from the nation's top investors. You
don't need to tell that to the thousands that flock to Omaha,
Nebraska once a year to glean fresh wisdom from Warren Buffett.
Many others follow the actions of George Soros, Carl Icahn or
others. These top investors have proven track records, and simply
mimicking their performance can make you wealthy.
One of my favorites: David Tepper from Appaloosa Management. Here's
a guy that put himself through college and eventually became one of
the titans of
investing. He's been so successful that the Carnegie Mellon School
of Business in Pittsburgh, Penn., where he got his MBA, is now the
Tepper School of Business.
I started following Tepper in 2008 and 2009 when he was loading up
on stocks even as others were fleeing. That kind of temerity --
buying when others are selling-- is the only way to beat the
. The net result: Tepper's picks are up 185% during the past five
years, compared with a 12% gain for the S&P 500, according to
Fast-forward to 2012, and Tepper is again getting aggressive on the
very stocks that many are shunning. This time, he's focusing on
three sectors, spreading his bets around on several stocks in each.
None of his stock picks are poised for great results in 2012. Yet
that's the point. Tepper knows that the best long-term investments
may hold little current appeal.
So where's he buying now?
If you receive alerts for my
$100,000 Real-Money Portfolio
, you already know that I'm a huge fan of
Ford Motor (NYSE:
, which is one of my largest holdings. The stock remains under
pressure because of the woes in Europe and other foreign markets,
but Ford's profits should rise smartly when the gloom recedes. The
same could be said for
. It's also very inexpensively priced in the context of where
profits will be in a better global economic environment.
Tepper apparently had a hard time figuring out which auto maker to
buy, so he bought both of them. He bought roughly $80 million in
Ford's stock and another $55 million in GM in the first quarter.
Both stocks have fallen even more since the first quarter ended,
and if history is any guide, Tepper will simply buy more.
Tepper is also focusing on a theme that I've been writing about for
nearly a year now. While many remember how airline stocks
periodically flirt with major financial distress, I've been noting
in this article
) that airlines are run so much more conservatively these days and
are far better-equipped to handle a weak
Delta Airlines (NYSE:
remains my favorite stock in the sector, not because it is the most
inexpensive in the group, but because it is so well-run.
Tepper seems to share my take. In the first quarter, he
significantly added to positions in
U.S. Airways (NYSE:
United Continental (NYSE:
while initiating a new position in
. He's now got more than $300 million tied up in these three
Tepper is also loading up on bank stocks, even as many other
investors are fleeing them. In the first quarter, he bought more
than $200 million of
, making it his single-largest buy in the quarter. You can read
to understand why I also think this bank stock could deliver major
Frankly, Tepper seems to be even more enthusiastic on bank stocks
than I am. In the first quarter, he bought $70 million worth of
Bank of America (NYSE:
and $60 million of
Hartford Financial (NYSE:
. These financial institutions are far from healthy, but Tepper
likely takes note of their deep value appeal, as both trade far
A clever tech play
But Tepper isn't just about super-cheap transport and financial
stocks. He also likes technology a great deal. His top holding is
Nasdaq 100 ETF (NYSE:
, with an eye-popping $1.3 billion in that fund. His $410 million
is his single-largest individual stock position.
What's he buying now? Well, one his largest fresh buys in the first
, which I wrote about
in this article
Risks to Consider:
Tepper's investment strategy isn't foolproof. His fund lost 27%
in 2008 (though not as bad as the 37% drop in the S&P 500 that
year). Indeed, the picks cited above are mostly lower than they
price he paid for them a few months ago.
Action to Take -->
The key to Tepper's success: fortitude. He stays the course on
controversial picks, and refuses to change his mind if the economy
or the market shows signs of weakness. Many investors are selling
stocks like Ford, Citigroup, Broadcom and others right now, which,
simply put, is short-sighted. These are precisely the times to go
bold. Sure, these stocks can fall further, but the stars will
eventually be aligned for their
to be much higher a year or two from now.
Be sure not to miss a single thing and have
updates sent to your email inbox, free for a limited time, as soon
as they're published by signing up
-- David Sterman
David Sterman does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of F, C in one or more if its "real money" portfolios.