Tepper Scoops Up Beaten Down UnitedHealth, Trims China Bet

David Tepper

(Bloomberg) -- Billionaire David Tepper showcased his style as a contrarian investor, scooping up shares of beleaguered UnitedHealth Group Inc. in the second quarter while trimming stakes in Chinese stocks.

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Tepper’s Appaloosa Management LP boosted its holdings of the health insurance giant by 2.3 million shares, valuing the stake at $764 million, according to a 13F filing Thursday and Bloomberg data analysis. Shares in the health insurer rallied as much as 14% in premarket trading on Friday.

UnitedHealth made up about 11.9% of Appaloosa’s $6.45 billion equity portfolio, marking the second-largest position after Alibaba Group Holding Ltd., even after the firm cut holdings in the e-commerce company. JD.com Inc. and PDD Holdings Inc. were among other Chinese companies who saw stakes reduced by the family office.

UnitedHealth rallied nearly 10% in after-hours trading as Warren Buffett’s Berkshire Hathaway Inc. also disclosed a stake in the company. The shares tumbled about 40% during the second quarter, as the health insurer suspended its annual forecast, replaced its chief executive officer and reportedly faced a criminal investigation for possible Medicare fraud. It was among the worst performers in the S&P 500 Index during the stretch. The company said in July it was cooperating with the Department of Justice and has “full confidence” in its practices.

With the investment in UnitedHealth, Tepper once again showed his willingness to make bold bets that most others shun.

He started buying Chinese stocks last year when investors fled the market amid concerns of a slowing economy and rising geopolitical risks. The bets have paid off as the MSCI China benchmark rallied about 46% over the past year as Beijing moves to stimulate the economy.

Read: Billionaire Investor Tepper Boosted China Bet Before Rally (1)

But Tepper slashed his Chinese positions last quarter, a period in which President Donald Trump’s tariff war roiled global markets. Appaloosa cut the holdings in Alibaba by more than 20% to 7.1 million shares, though at about $802 million, it remains Appaloosa’s largest holding.

Tepper also reduced his stakes in JD.com by 13%, slashed Baidu Inc. by 19% and reduced PDD by more than 50%.

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--With assistance from Subrat Patnaik.

(Updates with premarket stock in paragraph two.)

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