Appaloosa Cut U.S. Stocks by 30% as Tepper Sells Alibaba

  • Bought stake in Southwest Airlines; trimmed General Motors
  • Tepper has said market earnings expectations are too high

David Tepper, the billionaire founder of $20 billion Appaloosa Management, cut his hedge fund’s investments in U.S. stocks by almost a third in the last quarter, reducing stakes in some of its biggest investments.

The value of Appaloosa Management’s publicly disclosed U.S. equity positions dropped by $1.21 billion in the last quarter to $2.8 billion, according to a regulatory filing Friday. The hedge fund exited its holdings in Alibaba Group Holding Ltd., and trimmed stakes in General Motors Co. and HCA Holdings Inc., its top two largest holdings.

Tepper told CNBC in September that he’s not as optimistic on the stock market as he could be because expectations for earnings are very high.

“I’m not as bullish as I could be because I have problems with earnings growth, problems with multiples,” he said, referring to price-to-earnings ratios. “I can’t really call myself a bull.”

Tepper said in the September interview that his hedge fund sold its stake in Alibaba, the Chinese Internet firm, by July. The stake was valued at $112 million as of the end of the second quarter.

Tepper, a former credit trader at Goldman Sachs Group Inc., started his Short Hills, New Jersey-based hedge fund in 1993. Appaloosa bought a new stake in Southwest Airlines Co. that was valued at $62.2 million as of Sept. 30, according to the filing. It also bought stakes in Eagle Materials Inc. and WMIH Corp.

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