True Alpha - Tepper's Top Yield Stocks in Review

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One of the greatest hedge fund investors of all time, David Tepper is the president and founder of hedge fund Appaloosa Management where he has earned a global reputation for producing some of the highest returns ever on Wall Street. Tepper's windfalls have been made in banking, housing, and power companies, as well as on the bankruptcies of giants like Enron and others. A renowned philanthropist, Tepper has earned the moniker of "the true alpha" investor, claiming fame for a historical record payday of $4 billion in 2009. Tepper personally made $2.2 billion in 2012. As of September 2013, Tepper had a net worth of $7.9 billion, according to Forbes, also naming Tepper as the highest-earning among the top 40 hedge fund managers and traders in 2013.

Appaloosa Management was founded by David Tepper and Jack Walton in 1993. The hedge fund specializes in distressed debt and invests in public equity and fixed income markets around the world. Appaloosa had net returns of almost 30% last year, with an average annual return of 23.3% over 5 years, and 29.2% since inception in 1993. The stocks bought by David Tepper averaged a 12-month return of 21.45%. In 2010, he returned 22% compared to the S&P500 at 15.06%. His 15-year cumulative return is 27.4% annually.



David Tepper 's updated portfolio lists 64 stocks, five of them new, a total value of $6.28 billion, and a quarter-over-quarter turnover of 4%. The portfolio is weighted with top sectors: ETF, options, preferred at 21.6%, industrials at 18.6% and financial services at 18.6%.

Here's an update on Tepper's top three high-yield stocks, starting with a real estate investment trust, Chimera Investment Corporation, the highest-yield stock in his third quarter portfolio.

Chimera Investment Corporation ( CIM )

Yield: 12%

Weighting: 0.14%

Current Shares: 2,830,152

Up 9% over 12 months, Chimera Investment Corporation is a real estate investment trust with a market cap of $3.1 billion; the enterprise value is $4.92 billion. Shares were traded at around $3.02, with an EV-to-EBIT ratio of 11.60.

Organized in 2007, Chimera Investment Corporation operates as a specialty finance company that invests in residential mortgage backed securities, or RMBS, residential mortgage loans, real estate-related securities and various other asset classes. The company has focused its investment activities on acquiring non-agency RMBS and on purchasing residential mortgage loans that have been originated by select high-quality originators, including the retail lending operations of commercial banks.

Guru Action: As of Sept. 30, 2013, David Tepper reduced his position by 1.97%, selling 57,000 shares at an average price of $2.96 per share, for a 2% gain.

Over seven quarters of mixed results, David Tepper has averaged a gain of 14% buying 10,809,974 shares at an average price of $2.65 per share. Selling, he gained 1% on 7,979,822 shares at an average price of $2.98 per share.

Tracking historical data since 2007:

[ Enlarge Image ]

Here's a look at more guru and insider trading.

Freeport-McMoRan Copper & Gold ( FCX )

Yield: 3.70%

Weighting: 0.92%

Current Shares: 1,754,639

Up 7% over 12 months, Freeport-McMoRan Copper & Gold has a market cap of $35.56 billion; its shares were traded at around $34.47 with and P/E ratio of 12.50. GuruFocus currently ranks FCX with one star out of five stars for business predictability.

Incorporated in 1987, Freeport-McMoRan Copper & Gold deals in the mining of copper, gold and molybdenum. The company's portfolio of assets includes the Grasberg minerals district in Indonesia, significant mining operations in North and South America, and the Tenke Fungurume minerals district in the Democratic Republic of Congo ( DRC ).

Guru Action: As of Sept. 30, 2013, David Tepper made a new buy of 1,754,639 shares at an average price of $30.56 per share, for a 12.1% gain.

Tepper last sold out 520,337 shares at an average price of $34.02 per share in the first quarter of 2013, when he made a gain of 0.7%.

Over three quarters of mixed results, David Tepper has averaged a gain of 12% buying 1,754,639 shares at an average price of $30.56 per share.

Tracking historical data:

[ Enlarge Image ]

Tepper is one of four gurus who made a new buy of FCX in the third quarter.

Here's more guru and insider activity.

Carnival Corporation ( CCL )

Yield: 2.80%

Weighting: 0.47%

Current Shares: 903,619

Down 6% over 12 months, Carnival Corporation has a market cap of $28.73 billion; its shares were traded at around $35.66 with and P/E ratio of 25.10.

GuruFocus currently rates CCL with one star out of five stars for business predictability.

Carnival Corporation is a global cruise and vacation company. Carnival Corporation was incorporated in Panama in 1972 and Carnival Plc was incorporated in England and Wales in 2000. The company's portfolio of cruise brands includes Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn in North America, and others.

Guru Action: As of Sept. 30, 2013, David Tepper reduced his position by 49.24%, selling 876.430 shares at an average price of $36.31 per share, taking a 2% loss.

Over two quarters, David Tepper has averaged a gain of 5% buying 1,780,049 shares at an average price of $33.86 per share. Selling, he lost 2% on 876,430 shares at an average price of $36.31 per share.

Check out the guru and insider activity.

Tracking historical data:

[ Enlarge Image ]

Here is the complete portfolio of David Tepper .

1. David Tepper's Undervalued Stocks
2. David Tepper's Top Growth Companies
3. David Tepper's High Yield stocks
4. Stocks that David Tepper keeps buying

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CCL , CIM , DRC , FCX

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