Tepper Cut Bank Holdings, Bought Drug Stocks in First Quarter

Hedge-fund manager David Tepper cut his holdings in bank stocks, which helped him earn an estimated $4 billion last year, while investing in drug manufacturers during the first quarter.

Tepper’s Appaloosa Management LP held stakes in Johnson & Johnson, Merck & Co. and Pfizer Inc. with a combined value of about $258 million as of March 31, according to a Form 13F filed today with the U.S. Securities and Exchange Commission. The Short Hills, New Jersey, money-management firm didn’t report owning stock in these companies in its fourth-quarter filing.

Appaloosa pared holdings in financial companies during the first quarter, selling more than half of its preferred stock in insurer American International Group Inc. and all of its preferred stake in Bank of America Corp., today’s filing shows. He generated a 117 percent gain at his flagship Appaloosa Investment LP during the first nine months of 2009, in part by investing in bank stocks that surged in April of that year.

The money-management firm cut its stake in Citigroup Inc. to 62.4 million shares as of March 31 from 138.1 million on Dec. 31, according to the filing. Appaloosa’s holding in Wells Fargo & Co. common stock declined to 8.96 million shares from 11 million during the period.

Tepper’s earnings were tops among hedge-fund managers last year, according to estimates by AR Magazine.