In this article, we discuss the top 10 stock picks of billionaire David Tepper. If you want to skip our detailed analysis of these stocks, go directly to Billionaire David Tepper’s Top 5 Stock Picks.
David Tepper, the billionaire chief of Florida-based Appaloosa Management LP, manages more than $4.8 billion in 13F securities at his hedge fund. The top holdings of the hedge fund are concentrated in the technology, services, and basic materials sectors. The top ten holdings comprise over 57% of the entire portfolio. Tepper has a personal net worth of close to $16 billion and ranks 142nd on a list of the richest men in the world maintained by news publication Forbes. The billionaire founded the hedge fund in 1993.
According to the latest 13F filings, the portfolio value of the fund has dropped from $6.9 billion at the end of March this year to $4.8 billion at the end of June. The fund made new purchases in 4 stocks during this period, sold out of 12 stocks, made additional purchases in 2 stocks, and reduced holdings in 41 stocks. Tepper is a former employee of investment bank Goldman Sachs and was the third highest-earning hedge fund manager in 2018. He also owns Carolina Panthers, a National Football League team.
Some of the top stocks in the investment portfolio of Appaloosa Management LP at the end of the second quarter of 2021 included Micron Technology (NASDAQ:MU), Amazon.com, Inc. (NASDAQ:AMZN), and Facebook, Inc. (NASDAQ:FB), among others discussed in detail below. Tepper has expertise in bankruptcies and junk bonds. He has continued on this impressive growth trajectory, cementing a place of honor in the wider finance world that has struggled to keep up.
Our Methodology
With this context in mind, here is our list of the top 10 stock picks of billionaire David Tepper. These were picked from the investment portfolio of Appaloosa Management LP at the end of the second quarter of 2021. The list is compiled according to the value of each holding in the portfolio.
The analyst ratings of the firms are also discussed to provide readers with some more context about their investment decisions.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why should we pay attention to Tepper’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Billionaire David Tepper’s Top Stock Picks
10. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 45
D.R. Horton, Inc. (NYSE:DHI) is placed tenth on our list of top 10 stock picks of billionaire David Tepper. The firm operates as a homebuilding firm. It is headquartered in Texas. 13F filings reveal that Appaloosa Management LP owned 1.1 million shares in the company at the end of the second quarter of 2021 worth $103 million, representing 2.14% of the portfolio.
On September 27, investment advisory Citi reiterated a Buy rating on D.R. Horton, Inc. (NYSE:DHI) stock but lowered the price target to $104 from $106, noting that major homebuilders had cut fiscal year guidance but pushed margin outlooks higher.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Egerton Capital Limited is a leading shareholder in D.R. Horton, Inc. (NYSE:DHI) with 8.3 million shares worth more than $752 million.
Just like Micron Technology (NASDAQ:MU), Amazon.com, Inc. (NASDAQ:AMZN), and Facebook, Inc. (NASDAQ:FB), D.R. Horton, Inc. (NYSE:DHI) is one of the stocks that is attracting the attention of institutional investors.
9. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) is ranked ninth on our list of top 10 stock picks of billionaire David Tepper. The company markets energy-related services and is headquartered in Texas. Government filings show that Appaloosa Management LP owned 10.6 million shares in the company at the end of June 2021 worth $112 million, representing 2.33% of the portfolio.
On September 14, investment advisory Citi maintained a Buy rating on Energy Transfer LP (NYSE:ET) stock and raised the price target to $15 from $14. Timm Schneider, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Appaloosa Management LP is a leading shareholder in Energy Transfer LP (NYSE:ET) with 10.6 million shares worth more than $112 million.
In its Q1 2021 investor letter, Miller/Howard Investments highlighted a few stocks and Energy Transfer LP (NYSE:ET) was one of them. Here is what the fund said:
“Another upweight was Energy Transfer (ET), which was selling at a discount on EV/ EBITDA compared with the portfolio and had an attractive +20% FCF yield. Further, ET’s ample FCF should exceed the current distribution even if the Dakota Access Pipeline were to be shut down.”
8. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 146
Alibaba Group Holding Limited (NYSE:BABA) is a China-based diversified technology company. It is placed eighth on our list of top 10 stock picks of billionaire David Tepper. Latest data shows that Appaloosa Management LP owned 585,000 shares in the company at the end of the second quarter of 2021 worth $132 million, representing 2.74% of the portfolio.
On October 1, investment advisory KeyBanc maintained an Overweight rating on Alibaba Group Holding Limited (NYSE:BABA) stock but lowered the price target to $200 from $250. Hans Chung, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA) with 14 million shares worth more than $3.2 billion.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
7. PG&E Corporation (NYSE:PCG)
Number of Hedge Fund Holders: 64
PG&E Corporation (NYSE:PCG) is a California-based company that engages in the sale and delivery of electricity and natural gas to consumers. It is ranked seventh on our list of top 10 stock picks of billionaire David Tepper. According to securities filings, Appaloosa Management LP owned 16 million shares in the company at the end of June 2021 worth $165 million, representing 3.43% of the portfolio.
On August 16, investment advisory RBC Capital upgraded PG&E Corporation (NYSE:PCG) stock to Outperform from Sector Perform with a price target of $14. Shelby Tucker, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Third Point is a leading shareholder in PG&E Corporation (NYSE:PCG) with 81 million shares worth more than $833 million.
Micron Technology (NASDAQ:MU), Amazon.com, Inc. (NASDAQ:AMZN), and Facebook, Inc. (NASDAQ:FB) are some of the top stocks to buy now, just like PG&E Corporation (NYSE:PCG).
In its Q4 2020 investor letter, GoodHaven Capital Management, an asset management firm, highlighted a few stocks and PG&E Corporation (NYSE:PCG) was one of them. Here is what the fund said:
“During the period we purchased a new holding – PG&E Corporation – the California based utility (PCG). We expect that contrarian special situations will continue to (opportunistically) be an important part of the portfolio. After all, we bought PCG – which has filed Ch. 11 twice related to prior exposure to wildfire liabilities and staggering mismanagement – right in the middle of California’s recent heavy wildfire season. Our thinking here is that the reorganized utility has new regulatory protections that significantly reduces wildfire liability exposure, an above average rate growth profile and potentially much better management – they were searching for a new CEO when we made our investment. We purchased the stock at a high single digit forward earnings multiple, a discount to its peers that trade in the mid to high teens. Shortly after our purchases PG&E hired the well regarded Patti Poppe as their new CEO – we like this decision.”
6. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 57
Occidental Petroleum Corporation (NYSE:OXY) is placed sixth on our list of top 10 stock picks of billionaire David Tepper. The firm operates as an integrated oil and gas firm. It is headquartered in Texas. According to the latest filings, Appaloosa Management LP owned 5.7 million shares in the company at the end of the second quarter of 2021 worth $178 million, representing 3.69% of the portfolio.
On September 29, investment advisory Evercore ISI upgraded Occidental Petroleum Corporation (NYSE:OXY) stock to Outperform from In Line and raised the price target to $40 from $35, noting that domestic upstream for the firm had good momentum heading into 2022.
At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $3.6 billion in Occidental Petroleum Corporation (NYSE:OXY), up from 52 the preceding quarter worth $3.4 billion.
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Disclosure. None. Billionaire David Tepper’s Top 10 Stock Picks is originally published on Insider Monkey.
