Billionaire hedge fund manager David Tepper’s Appaloosa Management hedge fund returned some 30% in 2012, earning Tepper a cool $2.2 billion. This was more money than any other hedge fund manager in the industry made during 2012. So how did he do it? I dug a bit deeper into Appaloosa’s major holdings in 2012 and outlined the hedge fund’s big bets that paid off (see all of Appaloosa’s stocks).
Tepper made a big bet on Apple Inc. (NASDAQ:AAPL) during the fourth quarter, upping his stake by 75% the quarter. Apple is now Appaloosa’s top public equity holding, making up over 10.5% of his portfolio. The tech giant is quite the industry leader when it comes to smartphones and tablets. For the company’s 2012 fiscal year, it saw iPhone and iPad sales up 71% and 59% year over year, respectively. But its iPhone is its true money-maker, making up 50% of revenues last quarter (read more about why it’s time to buy Apple). Apple Inc. (NASDAQ:AAPL) competes with other major tech company Google when it comes to mobile operating system, and remains at number two as of the end of 2012.
1. Android 70%
2. iOS 21%
3. Blackberry 4%
Although Apple Inc. (NASDAQ:AAPL) is still battling with Android as the top mobile phone operating system, Apple also holds a strong position in the hardware market, coming in third; whereas Google’s Motorola is ninth, with 2% of the market share.
1. Samsung 23%
2. Nokia 18%
3. Apple 9%
Apple Inc. (NASDAQ:AAPL) is one of the cheapest “big” tech stocks in the industry, trading at only 10x earnings, whereas Google is trading at over 20x. Is this fair? There has been much speculation over Apple’s recent decline, but the tech company appears to be a compelling investment opportunity with leading smartphone and tablet market positions, and a PEG of only 0.5 (below 1.0 is a great growth at a reasonable price opportunity).
QUALCOMM, Inc. (NASDAQ:QCOM) was another of Appaloosa’s big bets during the fourth quarter, as the fund upped its stake 20%, and is its sixth largest holding as of 4Q. The tech company plays a big part in 3G wireless technologies and smartphones. This includes wireless networks in emerging markets, including China and India. Worth noting is that over 85% of all networks support 3G, which is a big positive for Qualcomm.
QUALCOMM, Inc. (NASDAQ:QCOM) is a major chipset supplier for Samsung, which is currently the largest seller of smartphone globally, owning 23% of the market share (see above). The product portfolio for QUALCOMM, Inc. (NASDAQ:QCOM) is not just reliant on smartphones, but also devices that are adopting 3G and 4G connectivity, including tablets and eReaders, with the entire non-phone related segment expected to grow some 40% annually through 2015 (see why Qualcomm beats out major competitor AMD).
Tepper’s Bet On Financials.