This 149-Bagger Has Been Selling Delta, United Continental, and J.C. Penney

Should you sell, too, or do you see reasons to buy?

Mar 10, 2014 at 5:15PM

The latest 13F season is here, when many money managers issue required reports on their holdings. It can be worthwhile to pay attention, as you might get an investment idea or two by seeing what some major investors have been buying and selling.

For example, consider Appaloosa Management, founded by investing giant David Tepper and known for investing in the debt of companies in distress. Tepper's investing history includes debt and stock in companies such as Enron and Worldcom. He made billions on bank stocks in 2009 after they had imploded and before they recovered. More recently, he invested in many housing-related companies. In a letter to shareholders last year, Tepper noted that had one invested $1 million in his hedge fund in 1993, it would have grown to $149 million over the past 20 years. Investing in the S&P 500 instead would have left you with $5.3 million. Tepper's performance reflects an average annual net gain of 28%. Wow.

Appaloosa Management's latest 13F report shows that it reduced its positions in Delta Air Lines (NYSE:DAL), United Continental Holdings (NYSE:UAL), and J.C. Penney Company (NYSE:JCP).

Delta Air Lines' stock more than doubled over the past year and averaged more than 50% growth annually over the past five. In the past year, the airline industry has been hammered by bad weather, but Delta has still posted increases in its unit revenue. (Consider that just in 2014, both Delta and United Continental have had to cancel roughly 20,000 or more flights!) Clearly, the company is doing something right. It has become a cash flow leader in its industry, for example, expecting to top $5 billion in 2014. Still, bears worry that its momentum may not be sustainable.

United Continental, meanwhile, has also seen its stock surge, and it carries a strong buy rating from analysts at Zacks Equity Research, who like its cost-cutting and expanding network (which includes new nonstop service between Los Angeles and Melbourne, Australia, and plans to connect San Francisco and Tokyo). United is forecasting weak results in its first quarter due to weather, but some see the company routinely making excuses.

J.C. Penney, meanwhile, has been struggling so much lately that some have wondered whether it will end up seeking bankruptcy protection in the next few years. Its fourth-quarter report, though, stunned skeptics, revealing some growing revenue and a smaller-than-expected loss. Website revenue grew by double digits, too. Some remain skeptical, however, and see sustainable profitability as unlikely.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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