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Billionaire David Tepper’s Investment Strategy and 10 Favorite Stocks

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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.

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The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

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