In this article, we will take a look at Billionaire David Tepper’s Investment Strategy and 10 Favorite Stocks.
David Tepper undoubtedly ranks among hedge fund legends, having founded Appaloosa Management in 1993 to become one of the world’s wealthiest people. These days, the billionaire is known to the public for owning several sports franchises, notably the Carolina Panthers of the National Football League and Charlotte FC of Major League Soccer. While the media has been focusing on his sporting endeavors lately, Appaloosa Management has been operating efficiently in the background.
Tepper took a unique approach at Appaloosa, deliberately seeking out distressed companies and betting on successful recoveries when other investors had given up on them. The foundation for his approach was laid by his first investment in the bankruptcy-ridden Algoma Steel. In the years that followed, Appaloosa continued to deliver exceptional returns by focusing on the debt of struggling companies such as Williams Corporation and Marconi.
The billionaire achieved exceptional long-term success despite the instability that occasionally resulted from his aggressive approach. Appaloosa generated average annual gains of about 25% between 1993 and 2024, considerably higher than the broader market.
More recently, Appaloosa’s Q3 2025 13F shows a portfolio executing a conviction-based rotation rather than a broad, conservative retreat. David Tepper focused on cyclicals and China exposure while carefully reducing mega-cap winners, indicating a trend toward lopsided mean-reversion potential. This adjustment also shows Tepper is moving away from several AI stocks, in tandem with other prominent hedge fund managers such as Michael Burry and Ray Dalio. Both of these market giants have warned about excessive valuations and the possibility of an AI bubble.
Our Methodology
To curate our list of David Tepper’s favorite stocks, we scanned Appaloosa Management’s Q3 2025 filings, using Insider Monkey’s 13F database. We then ranked these stocks by the value of Fisher Asset Management’s stake in each stock, in ascending order. We have also mentioned the number of hedge fund holders for each stock using Insider Monkey’s database of hedge funds as of Q3 2025.
We have added the performance of each stock from the end of September 2025 through February 13, 2026, providing readers with insight into how Appaloosa Management’s portfolio picks have performed during this period.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Caesars Entertainment Inc. (NASDAQ:CZR)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): -27.44%
Appaloosa Management’s Stake Value: $56.7 million
Number of Hedge Fund Holders: 71
Caesars Entertainment Inc. (NASDAQ:CZR) ranks among billionaire David Tepper’s 10 favorite stocks. On January 21, TD Cowen cut its price target for Caesars Entertainment Inc. (NASDAQ:CZR) to $35 from $40 while retaining a Buy rating on the company’s shares. The firm highlighted a weaker near-term outlook, particularly in Las Vegas, and anticipates “some turbulence” when Caesars reports fourth-quarter 2025 earnings.
TD Cowen decreased its Q4 2025 and fiscal year 2026 forecasts due to inconsistent visiting trends and increased volatility in Digital Hold, resulting in a lower sum-of-the-parts price target. Regardless of the short-term issues, the firm is “constructive on longer-term fundamentals” for the casino operator.
Meanwhile, Susquehanna raised Caesars Entertainment Inc. (NASDAQ:CZR) from Neutral to Positive on January 8, citing a “attractive risk/reward set-up” for the casino company.
Susquehanna stated that, although Caesars still has “strategic gaps” compared to higher-end offerings from peers, the company’s status as “largely the lowest-cost operator” with strong financial leverage could result in major stock gains if the expected positive trend inflection takes place.
Caesars Entertainment Inc. (NASDAQ:CZR) operates as a gaming and hospitality company. The company owns, leases, brands, or manages domestic properties in 18 states that offer slot machines, video lottery terminals, e-tables, hotel rooms, and table games, including poker.
