Appaloosa Management is a privately owned investment management firm. David Alan Tepper is the fund manager and the founder of Appaloosa Management.
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Appaloosa Management recently disclosed its holdings as of 2Q16. Whirlpool (WHR) is the firm’s top holding and it constituted 6% of its portfolio in 2Q16. Mohawk Industries (MHK) constituted 4% of the fund’s portfolio as of 2Q16. Previously, the fund held 0.55 million shares of MHK. In 2Q16, the firm bought another 0.2 million shares of MHK.
According to an institutional ownership report, Appaloosa Management constituted 1% of Mohawk Industries holdings. Appaloosa Management is the 14th-largest investor in Mohawk Industries, holding about 0.76 million shares worth $159.1 million. The largest investor in MHK is Vanguard Group with 5.5 million shares.
In 2Q16, the firm’s sector allocation was heavily tilted towards the energy (XLE), consumer discretionary (XLY), and communications sectors. These three sectors constitute 21.2%, 15.3%, and 15.1% of its portfolio, respectively. Taking a position in the energy and consumer discretionary sectors indicate the firm is making an investment in both cyclical and defensive sectors. The defensive sector has little correlation with the business cycle, whereas the cyclical sector highly correlates with the business cycle. This indicates that the firm doesn’t want to miss opportunities from a recovery in the United States (QQQ) (SPY) and also wants to safeguard the portfolio with defensive stocks.
In the next part of this series, we’ll analyze the Appaloosa Management’s largest position sale in 2Q16.