Appaloosa cut US stocks by 40% as Tepper exits Citi, Facebook

[NEW YORK] Billionaire investor David Tepper reduced his firm's investments in US stocks last quarter, liquidating stakes in some of the largest companies.

The value of Appaloosa Management's publicly disclosed US equity positions dropped by US$2.74 billion last quarter to US$4 billion, according to a regulatory filing Friday. The firm exited its holdings in Citigroup, Halliburton Co., Facebook and Apple. The firm also sold almost all its shares of an exchange-traded fund that tracks the Standard & Poor's 500 Index.

The moves came as Tepper, who manages about US$20 billion, made bullish comments about US stocks in interviews during the quarter. He said on CNBC in December that the S&P 500 could rise 8 per cent to 10 per cent in 2015 after telling Bloomberg Television in October that the price-to-earnings ratios for US stocks weren't high.

"The US economy is pretty good, stocks are not at high multiples right now," he said in the October interview.

The S&P 500 gained 4.4 per cent in the fourth quarter as oil prices dropped, the Federal Reserve pledged patience in raising interest rates and optimism grew about the world's largest economy.

A representative for Short Hills, New Jersey-based Appaloosa couldn't immediately be reached for comment.

The filings to the US Securities and Exchange Commission don't show non-US equities, holdings that aren't publicly traded, or cash. They also don't show wagers against companies.

Tepper, a former high-yield credit trader at Goldman Sachs Group Inc., started his hedge fund firm in 1993. The 57-year old is worth US$10.9 billion, according to the Bloomberg Billionaires Index.

Appaloosa exited stakes in 15 companies, including Ford Motor and Alibaba Group Holding during the quarter, according to data compiled by Bloomberg. Appaloosa's biggest sale was its Citigroup holding, which was valued at US$431 million at the end of September. The Halliburton stake was worth US$324 million.

Appaloosa reported one new US equity holding: It bought 2.9 million shares of American Realty Capital Properties, a real estate investment trust, valued at US$26.5 million as of Dec 31.

Money managers who oversee more than US$100 million in equities in the US must file a Form 13F within 45 days of each quarter's end to list those stocks as well as options and convertible bonds.

Fellow hedge fund Third Point saw the value of its publicly disclosed equity holdings jump 33 per cent to US$11.1 billion during the quarter, Bloomberg data show. The US$17 billion New York-based firm, run by Dan Loeb, added shares of companies including Citigroup, Phillips 66 and American International Group in the quarter, according to the filing.

Richard Perry's hedge fund firm, Perry Capital, boosted its position in AIG, bringing the stake to a market value of US$578 million as of Dec 31. The insurer is New York-based Perry's largest US equity holding. The firm also increased its investments in Ally Financial and Nokia Oyj, its second-and third-biggest stock positions.

BLOOMBERG