David Tepper is one of the most successful hedge fund managers of all time. His hedge fund generated an average annual return of 30% since its inception in 1993 and this success made him a double digit billionaire.
There is another reason why we like David Tepper. We analyzed the performance of David Tepper’s 13F stock picks covering the period from 1999 to 2012. Our goal was to find out whether outside investors can beat the market by imitating Tepper’s stock picks despite the fact that they are reported with a 45 day delay. In fact our methodology assumed that we bought his picks two months after the end of each quarter. The results were impressive. Investors imitating Tepper’s top 5 stock picks with a two-month delay would have returned 2.16% per month between 1999 and 2012. Investors investing in S&P 500 Index ETFs would have achieved a monthly return of only 0.32% during the same period.
We also tested the performance of his top 5 large-cap stock picks. Tepper’s top 5 large-cap stock picks managed to outperform the market by 64 basis points per month (0.96% per month vs. 0.32% per month). The best thing about this strategy is that you didn’t have to pay Tepper 2 and 20 for this performance. In this article we are going to take a look at David Tepper’s new positions in large-cap stocks almost all of which are from the technology space.
David Tepper reinvested in Facebook Inc. (NASDAQ:FB) buying 1.48 million shares of this social media stock during the third quarter. Earlier Tepper had sold off his complete position in Facebook Inc. (NASDAQ:FB) during the second quarter. He also took a new position in Apple Inc.(NASDAQ:AAPL) in the last quarter buying 800,000 shares of this stock. Apple Inc. (NASDAQ:AAPL) now comprises of 2.1% of his 13F portfolio with a total value $90 million at the end of the third quarter. Besides these 2 stocks, David Tepper also bought substantial new positions in Yahoo! Inc. (NASDAQ:YHOO), Bank of America Corp (NYSE:BAC) and QUALCOMM, Inc.(NASDAQ:QCOM).
The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy. Our research has shown that imitating a portfolio that includes the 15 most popular small-cap stocks among hedge funds can outperform the market by as much as 95 basis points per month on average (see more details here).
Appaloosa Management held $190 million of Facebook Inc. (NASDAQ:FB) at the end of the September quarter which made up 4.3% of the 13F portfolio. The company is the most valuable social media company on the planet, with a market value of more than $325 billion. Besides its extremely popular social media website, the company also owns important IT assets such as Instagram, Messenger, WhatsApp and Oculus. The Oculus virtual reality technology and content platform allows people to play games, consume content and connect with others. The stock has returned more than 12% over the last one year and is trading just 10% shy of its 52 week high price. Facebook Inc (NASDAQ:FB) did extremely well last quarter showing revenues of more than $7 billion, with net income coming at $2.38 billion. It reported cash and cash equivalents of more than $26 billion last quarter with zero debt liabilities. 149 funds tracked by our system held shares worth $16.27 billion in this stock, constituting 4.7% of the company’s float as of September 30th.