David Tepper Stock Portfolio: Top 5 Stock Picks

4. Meta Platforms, Inc. (NASDAQ:META)

Value of Appaloosa Management‘s 13F Position: $119 Million

Number of Hedge Fund Shareholders: 180

Hedge fund ownership of Meta Platforms, Inc. (NASDAQ:META) dropped for the fifth straight quarter in Q3. Tepper also sold off some META shares during the quarter, unloading 13% of his shares, but otherwise maintains strong conviction in the long-term outlook for the struggling social media giant. Larry Robbins’ Glenview Capital and Shashin Shah’s Think Investments were two of the many funds that ditched their META holdings during Q3.

You don’t have to squint very hard to see why hedge funds have been fleeing Meta Platforms, Inc. (NASDAQ:META) in droves. Revenue and user growth is in the low single digits, expenses have been soaring, and CEO Mark Zuckerberg hasn’t shown any willingness to back off of his costly metaverse ambitions.

Yet, it’s also easy to see why so many hedge funds are still long META, especially with shares now 71% off their all-time high. The company is still growing, has a promising TikTok competitor in Reels, and has been taking other initiatives to improve profitability, including slashing its workforce by 12%. Facebook still has the largest user base of any social media platform on the planet and will continue to make boatloads of money, especially as it attempts to better monetize its chat app users.

Baron Funds believes Meta Platforms, Inc. (NASDAQ:META) has a big opportunity in the targeted advertising space, as discussed in its Q3 2022 investor letter:

“Shares of Meta Platforms, Inc. (NASDAQ:META), the world’s largest social network, were down 16% during the quarter primarily due to broader digital advertising weakness and continued difficulties with advertising effectiveness as a result of Apple’s enhanced privacy features implemented in late 2021. We believe Meta will successfully resolve its short-term advertising technology issues by increasing AI adoption and by driving greater in-App user engagement with businesses, enabling it to grow its understanding of people’s interests based on first-party data. Longer term, we believe Meta will utilize its leadership in mobile advertising, massive user base, and technological scale to provide global advertisers targeted marketing capabilities at scale, with additional monetization opportunities ahead in newer areas such as Reels (Meta’s competing solution to TikTok) and e-commerce.”