Lam Research Corporation (NASDAQ: LRCX) and United Continental Holdings, Inc. (NYSE: UAL) Among Top Appaloosa Holdings With Upside

in INVESTING IDEAS by

Here are the most attractively priced stocks in David Tepper’s portfolio. Investors may want to take a closer look at the names below.


Appaloosa’s Most Undervalued Holdings

To determine which stocks are trading below their intrinsic value, aka “fair value” I used the finbox.io Fair Value estimates. I also wanted to blend in some indication of which stocks might be ready to make a move up soon because they’re popular with Wall Street analysts.

I calculated an average using the finbox.io fair value upside and analyst upside to create a blended upside which I then used to rank the most undervalued holdings.

Here are the top 7 stocks based on my calculations:

Appaloosa Most Undervalued Holdings
Ticker Name Upside (finbox.io) Upside (Analyst Target) Blend Upside
LRCX LAM RESEARCH CORP 27.9% 43.7% 35.8%
UAL UNITED CONTL HLDGS INC 54.2% 16.3% 35.2%
OC OWENS CORNING NEW 31.9% 31.2% 31.5%
ETE ENERGY TRANSFER EQUITY L P 44.2% 12.6% 28.4%
PCG PG&E CORP 32.7% 23.8% 28.2%
TMUS T MOBILE US INC 21.6% 30.7% 26.1%
MU MICRON TECHNOLOGY INC 24.6% 26.8% 25.7%

Lam Research Corporation (NASDAQ: LRCX) appears to be the most undervalued stock in the fund. The company has a blended upside of 35.8% relative to its current trading price. Value investors may want to take a deeper dive into the valuation of the company.

United Continental Holdings, Inc. (NYSE: UAL) appears to be the second most undervalued stock in the portfolio. The company’s blended upside of 35.2% is very intriguing. With 31.5% margin of safety, Owens Corning Inc (NYSE: OC) is the third most attractively priced security.

Other notable holdings with nice upside potential includes Energy Transfer Equity, L.P. (NYSE: ETE), PG&E Corporation (NYSE: PCG), T-Mobile US, Inc. (NASDAQ: TMUS) and Micron Technology, Inc. (NASDAQ: MU).


Why It’s Worth Monitoring Appaloosa Holdings

Hedge fund managers may seem to be a dime a dozen, but not many of them have had a stock market rally named after them. Billionaire David Alan Tepper, founder and portfolio manager at Appaloosa Management L.P., is the exception, having inspired what’s been dubbed the Tepper Rally of 2010.

Through his macro view of the financial markets, Tepper was able to predict not only the stock market rally but the catalysts behind it which ultimately proved to be the Fed’s stimulus.

Then in February 2009, his fund bought distressed financial stocks such as Bank of America(NYSE: BAC) when they were at their bottom. The sector quickly recovered later in the year and Tepper reportedly made $7 billion. This ultimately helped him become the top-earning hedge fund in 2009.

With such an impressive track record, it is worth it for individual investors to take a closer look at his portfolio and the stocks listed above.

Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Appaloosa’s holdings above represent positions held as of March 31st and not necessarily reflective of the fund’s current stock holdings.

However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.

The ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed above at the Appaloosa page.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Expertise: Valuation, financial statement analysis. Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock. His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com. Matt can be reached at matt@finbox.io or at +1 (516) 778-6257.

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