Appaloosa's Tepper Buys Citigroup, Wells Fargo
02/16/10 - 12:47 PM EST
NEW YORK (
) -- David Tepper, who managed some of the best-performing hedge funds last year, boosted his
holdings and initiated a position in
during the fourth-quarter, when the banks' shares fell, according to a regulatory filing.
Tepper, who specializes in distressed debt, ranked in the top 1% of hedge fund managers in 2009. His four funds --
onshore and offshore -- rose at least 84% each.
Shares of Citigroup, Wells Fargo and
Bank of America
dropped during the fourth quarter as the banks sold shares to raise enough capital to repay government bailout funds. Compensation outrage and the announcement of the so-called Volcker Rule, a proposal to limit banks' proprietary trading operations, have continued to batter financial stocks this year.
Tepper increased his Citigroup stake by 73% to 138 million shares since he last reported holdings in November. He started a new position in Wells Fargo, buying 11 million shares. Citigroup shares plunged 32% during the fourth quarter, while Wells Fargo's sank 4.2%. The
S&P 500 Financials Index
lost 3.7% during that period, as the
S&P 500 Index
Tepper reduced his Bank of America exposure by 4.7% to 32 million shares. However, Bank of America remains his top holding based on dollar value, followed by Citigroup.
Tepper's wagers on credit-card company
, online brokerage
and regional banks
Fifth Third Bancorp
were unchanged. He cut his position in
He doubled his stake in commercial real estate financier
and added 1.4 million shares of the insurer
Hartford Financial Services
Tepper also started new positions in several airlines. He bought 2.6 million shares of
, 3 million shares of
Delta Air Lines
and 3 million shares of
, owner of United Air Lines.
Appaloosa remains heavily skewed toward financial stocks, devoting more than 80% of its common holdings to that sector. Tepper's bet on financials demonstrates confidence in the future profitability of the sector. That optimism may be tested if the Volcker Rule passes. These rules, proposed in January, would force Citigroup, Bank of America and Wells Fargo to dramatically change their operations and divest certain businesses, a process that could be costly to banks and devastating to Tepper's portfolio.
-- Reported by Jake Lynch in Boston.