This 149-Bagger Has Bought DuPont, Citigroup, and Delta Air Lines

It can pay off to keep an eye on the successful big guys.

May 29, 2014 at 6:24PM

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. 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 has initiated or increased its positions in Citigroup Inc (NYSE:C), E I du Pont de Nemours, (NYSE:DD), and Delta Air Lines (NYSE:DAL).

Citigroup was hit hard in the credit crisis a few years back and hasn't had a great 2014, either. For example, while most banks subjected to recent Federal Reserve scrutiny passed its stress tests, Citigroup was among the minority that had its capital spending plan rejected. On the other hand, it topped earnings expectations in its last quarterly report, and my colleague Matt Koppenheffer declared that the company "ain't dead yet." At an investor conference this week, management warned that the company's second quarter would be disappointing, with trading revenue down as much as 25% due to global political instability and economic uncertainty, among other things. (It's not alone among big banks issuing such warnings, though.) A little more positive is news that Citigroup is looking to boost its mortgage lending business. The Wall Street Journal notes that some might question the wisdom of that, given the bad loans in the bank's portfolio, but the company plans to be "extremely careful" in its lending. With its forward P/E near nine, bulls see Citigroup's stock as undervalued, but bears still see it as risky.

DuPont is involved in a wide range of operations, such as agriculture (where it's a player in seeds and genetically modified organisms), industrial biosciences, nutrition and health, performance materials, and pharmaceuticals. The company's revenue growth has been slowing, so it has been restructuring itself, in part via spin-offs and investment in advanced biofuels, among other things. It has been shifting its focus from chemicals to agriculture, and it has been looking to unload its performance chemicals business. DuPont missed first-quarter expectations, blaming bad weather. The company's stock yields 2.6%.

Delta Air Lines' stock more than doubled over the past year, and it's near an all-time high. The company instituted a new dividend last year and is hiking it by 50% this year. Delta is has a lot going for it, such as actually being profitable when many airlines aren't and growing its earnings and profit margins. Its five-year goals are bold and include upping its operating margin from less than 10% to 11%-14% (admittedly, a wide range) and increasing its EPS by 10%-15% annually after this year. Delta has been enjoying robust free cash flow, which it's putting to good use, aggressively tackling its hefty debt load and aiming to please customers more via upgraded facilities and better cabin comfort. The airline industry has long been a tough one in which to turn a profit, but Delta is flying high. 

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click here to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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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