David Tepper, the founder of Appaloosa Management and owner of the Carolina Panthers, is widely regarded as one of the greatest hedge fund managers of his generation. Known for his all-in style and a unique ability to find value in distressed or hated sectors, Tepper has consistently outperformed the broader market by fading the crowd. As of the end of the fourth quarter of 2025, his 13F portfolio—valued at $6.9 billion—reflects a sophisticated bet on the next stage of the AI revolution and a controversial, high-stakes commitment to Chinese equities.
READ MORE: 15 Best Stocks to Buy According to Billionaire Ray Dalio.
One of the most discussed moves of the 2025–2026 cycle has been Tepper’s massive accumulation of Chinese tech giants like Alibaba and PDD Holdings. Despite geopolitical tensions and looming trade concerns, Tepper remains unfazed. When asked in a televised interview if he was worried about potential US tariffs impacting his China-heavy portfolio, he responded with characteristic bluntness: “My hedge is I don’t care.” While other institutional managers flee Chinese markets due to regulatory uncertainty, Tepper focused on the valuation gap, arguing that the underlying assets were too cheap to ignore, regardless of the political “noise.”
READ MORE: 10 Best Stocks to Buy According to Billionaire Paul Tudor Jones.
Our Methodology
To compile our list of billionaire David Tepper’s small and midcap stock picks with huge upside potential, we reviewed the latest 13F filings of Appaloosa Management LP. Next, we focused on the top stocks in his portfolio that are in the mid and small cap range. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q4 2025 database of 1041 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Billionaire David Tepper’s Small and Midcap Stock Picks with Huge Upside Potential
10. The Goodyear Tire & Rubber Company (NASDAQ:GT)
Appaloosa Management LP’s Stake: $22 Million
Tepper has had a long-term bet on The Goodyear Tire & Rubber Company (NASDAQ:GT) stock. The company first appeared in the 13F portfolio of Appaloosa Management LP back in the fourth quarter of 2010. This position comprised over 10 million shares. The holding was increased to 22 million shares by the second quarter of 2013. Thereafter, the position was trimmed and sold off completely by the middle of 2017. A new position was then opened early 2020 and sold off in early 2022. The present stake, purchased in the second quarter of 2025, began with 861,000 shares and was increased to 5 million shares in the third quarter of 2025. Filings for the fourth quarter of 2025 show that the fund has trimmed this holding by 50% and owns 2.5 million shares in the company.
The primary driver of hedge fund interest in The Goodyear Tire & Rubber Company (NASDAQ:GT) stock has been the visible success of the strategic review initiated by the firm in late 2023. Management has hit and exceeded restructuring milestones. As of early 2026, Goodyear has completed all three planned major divestitures – Off-the-Road tires, Chemicals, and the Dunlop brand – generating over $2.2 billion in gross proceeds. The company achieved a $1.5 billion annualized run-rate benefit by the end of 2025. Institutional investors are also focused on the fortress balance sheet being built through debt retirement. Proceeds from the $2.2 billion in asset sales are being used to retire high-interest debt. In early 2026, the company retired $500 million in 9.5% notes, which analysts estimate will save roughly $70 million in annual interest, providing an immediate boost to adjusted earnings per share.
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