David Tepper’s Appaloosa Management sharply boosted the size of two of its largest holdings in the third quarter. The eclectic hedge fund firm increased its largest position, chipmaker Micron Technology, by 32 percent and social media giant Facebook, its third-largest long, by 40 percent. However, Appaloosa trimmed No. 2 position Alibaba Group Holding, the Chinese e-commerce giant, by 3 percent. Appaloosa also boosted its stake in NRG Energy by nearly six-fold, catapulting the power company to the tenth-largest long position. The opportunistic investor also established four new investments, but none of them became sizable holdings. It also liquidated 14 positions, but none of them were significant holdings.
Keith Meister’s Corvex Management established a sizable new position in media giant Comcast Corporation in the third quarter. According to its quarterly regulatory filing, the activist bought 2.45 million shares, making it the firm’s eighth-largest U.S. long. However, to put it into perspective, this is a very tiny stake in Comcast.
Julian Robertson Jr.’s family office, Tiger Management, liquidated three sizable positions in the third quarter: generic drug maker Teva Pharmaceutical Industries, online travel agency Priceline Group, and shoe giant Nike. During the same period, it also established six new positions, but none of them became a top-ten holding. The largest position of this group by market value is health insurer Anthem.
Credit Suisse has issued a performance warning for November. After a pretty strong October for most hedge funds, November is getting off to a rough start, according to the latest Global Hedge Fund bulletin published by Credit Suisse. It reports that deal risk increased as merger spreads have widened. Meanwhile, high yield bonds have fallen. It also points out that momentum has stalled as many popular longs have underperformed the market.
Further, Credit Suisse says the majority of equity underperformance is coming from stocks involved in M&A, information technology, and consumer staples longs and value/retail shorts. In fact, energy longs are the only outperformers among popular longs so far this month. Even so, the firm tells clients that managers “maintain a bullish stance — confident they will get back up again.”