In this article, we present the list of the only 10 stocks billionaire David Tepper was buying in Q4. You can skip our comprehensive analysis of Appaloosa Management’s history, investment philosophy, and hedge fund performance, and go directly to The Top 5 Stocks Billionaire David Tepper Was Buying in Q4.
Twitter, Inc. (NYSE:TWTR), Visa Inc. (NYSE:V), and Walmart Inc. (NYSE:WMT) were some of the major holdings shed during the Q4 portfolio shakeup undertaken by billionaire money manager David Tepper, who sold off some or all of the shares from 28 of his holdings. Meanwhile, Tepper showed strong conviction in just ten stocks during the quarter, adding shares of them to his 13F portfolio.
David Tepper’s Appaloosa Management is one of the most successful hedge funds of all time, earning net gains of $30.70 billion for its investors since the fund’s inception in 1993 according to a report released by LCH Investments. The fund’s profitable ways continued in 2021, as Appaloosa enriched its clients (which are mainly Tepper himself, his partners, and the fund’s employees) by another $2.1 billion.
Tepper, who owns the NFL’s Carolina Panthers, has been actively returning client money in recent years and it’s expected that he will eventually convert his hedge fund into a family office that no longer serves outside clients. Given that, the fund’s assets under management have dropped considerably from their peak of over $20 billion in 2014, sliding to less than $14 billion by 2020.
That could partially explain why Tepper was selling off far more stocks than he was buying in Q4, but the main reason appears to be that he’s simply bearish on stocks at the present moment. In an October interview with CNBC, Tepper stated that he doesn’t believe stocks are a great investment right now given the unpredictability of interest rates and rising inflation.
It’s clear then that David Tepper has quite a bit of conviction in the ten stocks he was buying during Q4 despite his overall apprehensiveness towards the stock market. We’ll take a look at each of those ten stocks in this article.
We follow hedge funds like Appaloosa Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
The following list is based on Appaloosa’s latest 13F filing with the SEC for the December 31 reporting period, which revealed that Tepper opened five new long positions and added a net total of shares to five of his existing holdings during the fourth quarter. The stocks are ranked based on the overall value of Appaloosa’s position in those stocks.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
The Only 10 Stocks Billionaire David Tepper Was Buying in Q4
10. Foot Locker, Inc. (NYSE:FL)
Value of Appaloosa Management‘s 13F Position: $7.24 million
Number of Hedge Fund Shareholders: 28
Foot Locker, Inc. (NYSE:FL) kicks off the list, being a newly added position to David Tepper’s 13F portfolio during Q4. Tepper bought 165,938 shares of the shoe and apparel retailer during the quarter, building a relatively small position in relation to his overall portfolio. Hedge funds haven’t been overly bullish on Foot Locker in recent years, as hedge fund ownership of the stock is 36% lower than it was in early 2017.
Foot Locker, Inc. (NYSE:FL) shares made big gains from the early days of the pandemic through the middle of May 2021, but have fallen by over 50% since then, including by 29% in 2022. Foot Locker announced grim news alongside its modest Q4 financial results, revealing that it expects sales to decline by 4% to 6% in 2022 and same-store brick-and-mortar sales to fall by 10%.
Foot Locker, Inc. (NYSE:FL) is being hurt by NIKE, Inc. (NYSE:NKE)’S push into direct-to-consumer sales, as the footwear titan is Foot Locker’s largest supplier. Foot Locker is aiming to diversify its brands in response as well as ramp up its own private label merchandise, but it appears that won’t be enough in the near-term o offset its declining relationship with Nike.
Unlike Twitter, Inc. (NYSE:TWTR), Visa Inc. (NYSE:V), and Walmart Inc. (NYSE:WMT), which were featured on David Tepper’s Appaloosa Management Sold These 10 Stocks Before Entering 2022, the billionaire hedge fund manager is bullish on Foot Locker and several other clothing and sports-related brands in 2022.
9. The Gap Inc. (NYSE:GPS)
Value of Appaloosa Management‘s 13F Position: $8.72 million
Number of Hedge Fund Shareholders: 30
The Gap Inc. (NYSE:GPS) represents another relatively small new position added to David Tepper’s 13F portfolio during Q4, consisting of 494,032 shares of the iconic apparel company. Tepper is again going against the hedge fund grain with this position, as GPS ownership among funds dropped by 33% in 2021.
Unfortunately for Tepper and the company’s other investors, The Gap Inc. (NYSE:GPS) shares have also struggled mightily during the first two months of 2022, losing 21% of their value. Supply chain issues that resulted in severe inventory restraints did in the company during the crucial holiday season, with the company already having lost $300 million in sales by late November.
One of The Gap’s strongest brands, Old Navy, has also shown weakness in recent quarters due to its exposure to low-income consumers and its own supply chain challenges. The Gap Inc. (NYSE:GPS) was also removed from the S&P 500 in January, putting additional downward pressure on the stock.
8. Dicks Sporting Goods Inc. (NYSE:DKS)
Value of Appaloosa Management‘s 13F Position: $20.48 million
Number of Hedge Fund Shareholders: 38
178,072 shares of Dicks Sporting Goods Inc (NYSE:DKS) were bought by Tepper’s Appaloosa Management during Q4 as the fund initiated a position in the sporting goods retailer ahead of what is anticipated to be a rebound in sports and athletic-based activities among consumers coming out of the pandemic.
Even in the midst of the pandemic, Dicks Sporting Goods Inc (NYSE:DKS) has fared surprisingly well, delivering large earnings beats during each of the first three quarters of 2021, including a 238% beat in Q1. In turn, Dicks’ has used that cash to reward shareholders with a steadily rising dividend that now yields 1.67%, as well as share buybacks, including an additional $2 billion authorized in December.
DKS shares are down by 8% this year as investors appear somewhat worried about the company’s forthcoming Q4 earnings report based on its previous full-year guidance. Despite its solid growth, Dicks Sporting Goods Inc (NYSE:DKS) trades at a near value stock level, at just 8x expected adjusted 2021 earnings.
7. Nordstrom, Inc. (NYSE:JWN)
Value of Appaloosa Management‘s 13F Position: $30.99 million
Number of Hedge Fund Shareholders: 28
Nordstrom, Inc. (NYSE:JWN) is yet another shoe and apparel retailer that was added to Tepper’s 13F portfolio, as Appaloosa bought 1.37 million JWN shares during the December quarter. Hedge fund ownership of Nordstrom inched up by 12% during Q4.
As with The Gap, Nordstrom, Inc. (NYSE:JWN) has faced some supply chain challenges, with Nordstrom Rack proving to be a particular sore spot. The department store’s Q3 2021 sales were 8% lower than they were two years earlier, while Nordstrom’s overall net sales also came in slightly below their pre-pandemic levels despite rising by 18% year-over-year.
Mayar Capital, a former longtime shareholder of Nordstrom, Inc. (NYSE:JWN), explained its decision to part ways with the stock in its Q3 2021 investor letter:
“Let us first start with the bad news. We fully exited our investment in Nordstrom during the quarter, one that we’ve held for many years and one that’s been a full position for us over the past 3 or 4 years. While the business and the stock have recovered substantially from the lows reached at the depth of the pandemic, the company’s recent performance has forced us to question its competitive position.
As you may recall, our view for many years was that Nordstrom was far ahead of competition in developing their online sales channel. Further, we believe that they have executed very well by taking advantage of their mix of physical locations to enable a seamless “omnichannel” experience for their customers. These two factors combined with the secular shift to online selling led us to believe that they were going to continue to capture market share from the competition. That seemed to be the case for several years…” (Click here to see the full text)
6. Kohl’s Corporation (NYSE:KSS)
Value of Appaloosa Management‘s 13F Position: $81.49 million
Number of Hedge Fund Shareholders: 33
Kohl’s Corporation (NYSE:KSS), yet another shoe and apparel retailer, closes out the first half of this list. Unlike the previous positions, Tepper was already a shareholder of KSS heading into Q4, having taken a stake in the company a year earlier. He added another 150,000 shares to his holding during the latest quarter, lifting it to 1.65 million.
Hedge fund ownership of Kohl’s Corporation (NYSE:KSS) is down by 21% since the middle of 2020, and slid by another 11% during Q4. Steve Cohen’s Point72 and Dmitry Balyasny’s Balyasny Asset Management were among the hedge funds that unloaded their positions in KSS during the quarter.
There was even bigger hedge fund-related wheeling and dealing in Kohl’s Corporation (NYSE:KSS) in January when Acacia Research, owned by feared activist hedge fund Starboard Value, made an unsolicited buyout offer to the company for $64 per share or $9 billion in total. KSS shares immediately shot up near the $64 mark after the news, but have since retreated to less than $56 after the company described the bid as inadequate and adopted a poison pill shareholder plan to prevent a hostile takeover.
While Twitter, Inc. (NYSE:TWTR), Visa Inc. (NYSE:V), and Walmart Inc. (NYSE:WMT) lost favor with Tepper during Q4, the billionaire investor is clearly bullish on the apparel retail sector rebounding in 2022. See what other stocks he was buying in the second half of this article.
Click to continue reading and see The Top 5 Stocks Billionaire David Tepper Was Buying in Q4.
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Disclosure: None. The Only 10 Stocks Billionaire David Tepper Was Buying in Q4 is originally published at Insider Monkey.