Billionaire David Tepper’s Top 5 Stock Picks

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In this article, we discuss the top 5 stock picks of billionaire David Tepper. If you want to read our detailed analysis of these stocks, go directly to Billionaire David Tepper’s Top 10 Stock Picks.

5. T-Mobile US, Inc. (NASDAQ:TMUS)

Number of Hedge Fund Holders: 100  

T-Mobile US, Inc. (NASDAQ:TMUS) is ranked fifth on our list of top 10 stock picks of billionaire David Tepper. The firm provides communication services and is headquartered in Washington. According to the latest filings, Appaloosa Management LP owned 2.5 million shares in the company at the end of the second quarter of 2021 worth $364 million, representing 7.55% of the portfolio. 

On September 20, investment advisory Loop Capital initiated coverage of T-Mobile US, Inc. (NASDAQ:TMUS) stock with a Buy rating and a price target of $160. Stephan Bisson, an analyst at the advisory, issued the ratings update. 

Out of the hedge funds being tracked by Insider Monkey, Greenwich-based investment firm Viking Global is a leading shareholder in T-Mobile US, Inc. (NASDAQ:TMUS) with 7.5 million shares worth more than $1 billion. 

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 155 

Alphabet Inc. (NASDAQ:GOOG) is a California-based diversified technology company. It is placed fourth on our list of top 10 stock picks of billionaire David Tepper. According to securities filings, Appaloosa Management LP owned 146,000 shares in the company at the end of June 2021 worth $365 million, representing 7.57% of the portfolio. 

On September 17, investment advisory Jefferies reiterated a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and raised the price target to $3,325 from $3,150, noting the improved margin profile of the firm and the growth of the YouTube platform. 

Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.9 million shares worth more than $7.3 billion. 

In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:

“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”

3. Facebook, Inc. (NASDAQ:FB

Number of Hedge Fund Holders: 266   

Facebook, Inc. (NASDAQ:FB) is a California-based technology company that owns and runs several social platforms. It is ranked third on our list of top 10 stock picks of billionaire David Tepper. Latest data shows that Appaloosa Management LP owned 1.2 million shares in the company at the end of the second quarter of 2021 worth $418 million, representing 8.67% of the portfolio. 

On September 30, investment advisory Oppenheimer maintained an Outperform rating on Facebook, Inc. (NASDAQ:FB) stock with a price target of $405, underlining that the firm remained a staple for performance marketing campaigns. 

At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc. (NASDAQ:FB), up from 257 in the preceding quarter worth $40 billion. 

In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:

“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 271     

Amazon.com, Inc. (NASDAQ:AMZN) is placed second on our list of top 10 stock picks of billionaire David Tepper. The company operates as a technology firm with core interests in the ecommerce business. It is headquartered in Washington. Government filings show that Appaloosa Management LP owned 125,000 shares in the company at the end of June 2021 worth $430 million, representing 8.89% of the portfolio. 

On September 30, investment advisory RBC Capital initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) stock with an Outperform rating and a price target of $4,150, noting the firm had a “proprietary channel work on the advertising industry”.

Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. (NASDAQ:AMZN) with 3.8 million shares worth more than $13 billion.  

In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said: 

“Amazon (AMZN):We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.

I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.

Generally, I believe there are three reasons to sell an investment:1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.

In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.

With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.

So why did we decide to sell the investment then? Simply put, Amazon is …”read the entire letter here]

1. Micron Technology (NASDAQ:MU)

Number of Hedge Fund Holders: 87     

Micron Technology (NASDAQ:MU) is ranked first on our list of top 10 stocks pick of billionaire David Tepper. The firm markets memory and storage products. It is headquartered in Idaho. 13F filings reveal that Appaloosa Management LP owned 5.6 million shares in the company at the end of the second quarter of 2021 worth $480 million, representing 9.94% of the portfolio. 

On September 29, investment advisory Citi maintained a Buy rating on Micron Technology (NASDAQ:MU) stock with a price target of $120. Christopher Danely, an analyst at the advisory, issued the ratings update. 

At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Micron Technology (NASDAQ:MU), down from 100 in the preceding quarter worth $7.6 billion.

In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ:MU) was one of them. Here is what the fund said: 

“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.

With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.

As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.

While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.

The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”

You can also take a peek at 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 and Top Robinhood Stocks Popular on Reddit.

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