Billionaire David Tepper’s New Stock Picks

David Tepper is the founder and manager of Appaloosa Management which is regarded as of one of the most successful hedge funds in recent times. The fund has generated an average annual return of 30% since its inception in 1993. It had 13F portfolio value of $4.4 billion at the end of the September. As per its latest round of 13F filing, Appaloosa Management bought 13 new stocks and made additional purchases in six of its existing holdings. In the article below, we take a look at some of Tepper’s major buys during the quarter ending September such as Facebook Inc (NASDAQ:FB), Apple Inc (NASDAQ:AAPL), Yahoo! Inc. (NASDAQ:YHOO), Tempur Sealy International Inc (NYSE:TPX), and Bank of America Corp (NYSE:BAC).

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

Bank of America Corp (NYSE:BAC) constituted 1.47% of Appaloosa Management’s portfolio at the end of the third quarter. The fund bought 4.1 million shares in this company with a value of $64.7 million by the end of September. Many bulls believe Bank of America Corp (NYSE:BAC) will benefit from the potential loosening of regulations expected under Donald Trump administration. In addition, Trump’s pro-inflationary policies could also help boost Bank of America’s ROI, which could increase buybacks and dividends. Other funds bullish on Bank of America Corp (NYSE:BAC) include Stanley Druckenmiller’s Duquesne Capital and Fisher Asset Management. As per our system, 112 funds held shares worth $7.24 billion in this stock during the third quarter, as compared to 102 hedge funds holding shares worth $5.28 billion during the second quarter.

Tempur Sealy International Inc (NYSE:TPX) deals in bedding products and caters to customers in United States, Canada, Europe, Asia-Pacific and Latin America. Appaloosa Management bought 1.2 million shares valued at $67 million during the third quarter. Tempur Sealy International reported an increase of $28 million in revenues to $832 million during the July-September period. Management is confident that their operational initiatives will likely drive margin expansion in the future. Like Appaloosa, Cheyne Capital also bought shares during Q3, worth $3 million in Tempur Sealy International Inc (NYSE:TPX). 34% of the company’s float was held by 32 elite funds at the end of third quarter.

David Tepper took a new position in Yahoo! Inc. (NASDAQ:YHOO) by buying 1.8 million shares during the third quarter. The stock was one of the top buys of Appaloosa Management constituting 1.76% of the fund’s portfolio as of September end. In terms of smart money funds that Insider Monkey tracks, the number of funds owning Yahoo! Inc. (NASDAQ:YHOO) in their portfolio increased to 90 from 81 quarter over quarter. The value of their holdings also went up to $8.2 billion from $6.76 billion in the quarter earlier. After trending higher since February, shares of Yahoo have leveled off due to the election of Donald Trump, who might make things tougher for China if he follows through with his campaign promises. If the Chinese economy slows down, Alibaba’s earnings could take a hit. 

Appaloosa Management bought 800,000 shares of Apple Inc (NASDAQ:AAPL) making it one of the top buys of the fund for the time period. Apple Inc (NASDAQ:AAPL) constituted 2.05% of Appaloosa Management’s portfolio at the end of the third quarter with a value of $90.4 million. Amongst other funds that we track, Aaron Cowen’s Suvretta Capital Management and Dan Loeb’s Third Point also initiated new positions in Apple Inc (NASDAQ:AAPL) buying around 2.5 million shares each. Although some bears fear that Apple Inc (NASDAQ:AAPL) might suffer from restrictive trade policies under the new Trump administration, many of the same bears also acknowledge that the company will benefit from Trump’s lower tax policy (especially as it pertains to the repatriation of foreign profits). As per our database, the number of hedge funds long on Apple Inc (NASDAQ:AAPL) increased to 145 from 116 quarter over quarter. They constituted 2% of the company’s float as of September 30.

Appaloosa Management took a new position in Facebook Inc (NASDAQ:FB), investing $190 million in Mark Zuckerberg’s creation during the third quarter. The fund again bought ~1.5 million shares during the quarter, after selling off its complete position during the second quarter. Some other funds long on Facebook Inc (NASDAQ:FB) include Crispin Odey’s Odey Asset Management Group and billionaire Paul Tudor’s Tudor Investment Corp. Facebook Inc (NASDAQ:FB) reported a strong third quarter with revenues increasing to $7 billion up from $6.4 billion in the quarter earlier. Facebook Inc (NASDAQ:FB) also announced that it would start a $6 billion stock buyback program. By the end of the third quarter, 149 funds tracked by our system held shares worth $16.27 billion in this stock constituting 4.7% of the company’s float.

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