David Tepper - Appaloosa Management Portfolio

David Tepper - Appaloosa Management Q 4 2023 Portfolio

Appaloosa Management, a hedge fund managed by David Tepper, disclosed 39 security holdings in their SEC 13F filing for the fourth quarter of 2023, with a total portfolio value of $5,657,443,000

Portfolio Overview:

As of 31 December, 2023, David Tepper’s top holdings were:

META – Meta Platforms Inc.

  • Portfolio Allocation: 11.57%, a prominent position.
  • Recent Activity: Reduced holdings by 5.13%.
  • Shares Held: 1,850,000.
  • Reported Price: $353.96 per share.
  • Value at Reported Price: Approximately $654.826 million.

The reduction in Meta Platforms may reflect a strategic portfolio rebalance; however, the significant allocation suggests confidence in the company’s long-term potential for growth and innovation in digital and social media spaces.

MSFT – Microsoft Corp.

  • Portfolio Allocation: 11.30%, nearly equal to META’s share.
  • Recent Activity: Increased holdings by 3.98%.
  • Shares Held: 1,700,000.
  • Reported Price: $376.04 per share.
  • Value at Reported Price: Around $639.268 million.

The addition to Microsoft indicates a bullish view on its cloud services, enterprise software solutions, and growth potential, which may align with Tepper’s strategy for investing in companies with solid market positions and sustainable competitive advantages.

AMZN – Amazon.com Inc.

  • Portfolio Allocation: 10.61% of the portfolio.
  • Recent Activity: An increase of 5.33%.
  • Shares Held: 3,950,000.
  • Reported Price: $151.94 per share.
  • Value at Reported Price: $600.163 million.

Amazon’s diversified business model, including e-commerce dominance and AWS cloud services, likely presents a compelling growth narrative that fits within Appaloosa’s investment framework.

NVDA – NVIDIA Corp.

  • Portfolio Allocation: 6.92%, a significant stake.
  • Recent Activity: Reduced holdings by 22.93%.
  • Shares Held: 790,000.
  • Reported Price: $495.22 per share.
  • Value at Reported Price: $391.224 million.

Despite the reduction, NVIDIA’s leadership in graphics processing units (GPUs) for gaming and accelerating adoption in AI and data centers might justify a substantial position.

UBER – Uber Technologies Inc.

  • Portfolio Allocation: 6.53%.
  • Recent Activity: Reduced holdings by 17.24%.
  • Shares Held: 6,000,000.
  • Reported Price: $61.57 per share.
  • Value at Reported Price: $369.420 million.

Uber’s position as a leader in ride-sharing and delivery services, combined with its potential to scale and expand into new markets, could be attractive despite the reduction in shares.

BABA – Alibaba Group Holdings

  • Portfolio Allocation: 5.96%.
  • Recent Activity: Increased holdings by 20.83%.
  • Shares Held: 4,350,000.
  • Reported Price: $77.51 per share.
  • Value at Reported Price: $337.169 million.

The increased stake in Alibaba may signal a conviction in the company’s e-commerce and cloud computing segments, seeing the current valuation as an opportunity within the Chinese market context.

GOOG – Alphabet Inc. CL C

  • Portfolio Allocation: 5.73%.
  • Recent Activity: Reduced by 16.36%.
  • Shares Held: 2,300,000.
  • Reported Price: $140.93 per share.
  • Value at Reported Price: $324.139 million.

Alphabet’s core advertising business and ventures in cloud computing, AI, and consumer hardware provide a diverse growth platform, which, despite the reduction, still holds a noteworthy place in the portfolio.

AMD – Advanced Micro Devices

  • Portfolio Allocation: 5.24%.
  • Recent Activity: Reduced by 11.65%.
  • Shares Held: 2,010,000.
  • Reported Price: $147.41 per share.
  • Value at Reported Price: $296.294 million.

AMD’s investment in cutting-edge semiconductor technology and its competition with industry giants may present a high-growth potential that aligns with Tepper’s investment strategy, despite recent reductions.

Analyzing Amazon.com Inc (AMZN): Why is David Tepper investing in AMZN ?

Financial Performance and Health

Revenue Growth: Amazon has shown consistent revenue growth over the years, with a notable 11.83% year-over-year (YoY) increase in the trailing twelve months (TTM). This growth trajectory, even amidst various market conditions, highlights the company’s robust business model and market demand for its services.

Profitability: The net income of $30.43B in TTM, coupled with a profit margin of 5.29%, indicates Amazon’s ability to convert revenue into actual profit effectively. This profitability, despite the massive scale of operations and investments into new ventures, is a positive sign for investors.

Cash Flow: Amazon’s strong operating cash flow of $84.95B and a free cash flow of $36.81B in TTM showcase its operational efficiency and financial flexibility. High free cash flow is particularly appealing for investors as it provides the company with the means to invest in growth opportunities, pay down debt, or return value to shareholders.

Market Position and Valuation

Market Cap and Enterprise Value: With a market capitalization of $1.80T and an enterprise value of $1.85T, Amazon is one of the largest companies globally by valuation, reflecting its dominant market position and diversified business operations.

Valuation Ratios: The forward PE ratio of 42.18, although high, might be justified by Amazon’s growth prospects, market position, and innovation capabilities. The PS ratio of 3.13 indicates that the market values each dollar of Amazon’s sales relatively high, which is common for companies with high growth potential.

Stock Performance: The 52-week price change of +91.78% significantly outperforms the market, suggesting strong investor confidence in Amazon’s future prospects.

Strategic Initiatives and Future Growth

Diversification: Amazon’s continuous expansion into new markets (e.g., cloud computing with AWS, media with Amazon Prime, grocery with Amazon Fresh) diversifies its revenue streams and reduces dependency on its traditional e-commerce business.

Innovation and R&D: A substantial investment in research and development ($85.62B in TTM) underscores Amazon’s commitment to innovation, helping it to stay ahead in competitive and rapidly evolving industries.

Global Expansion: Amazon’s growing international presence can open up new revenue streams and reduce its exposure to any single economic downturn.

Risks and Considerations

High Competition: Amazon operates in highly competitive markets, facing rivals like Walmart in retail and Google and Microsoft in cloud computing.

Market Expectations: Amazon’s high valuation comes with lofty market expectations. Any signs of slowing growth or profitability could disproportionately affect its stock price.

Conclusion

David Tepper’s investment in Amazon could be attributed to the company’s strong financial health, sustained revenue growth, significant market position, and future growth potential through diversification and innovation. Despite potential risks from competition and regulation, Amazon’s strategic initiatives position it well for long-term success. The high valuation ratios indicate market confidence in Amazon’s future growth, which must be continually justified by the company’s performance.

Who is David Tepper ?

1957:

·      David Alan Tepper is born on September 11 in Pittsburgh, Pennsylvania.

1978:

·      Graduates with a Bachelor of Arts degree in economics from the University of Pittsburgh.

1980:

·      Begins working for Equibank as a credit analyst in the treasury department.

1982:

·      Earns an MBA from Carnegie Mellon University.

1984:

·      Joins Keystone Mutual Funds in Boston.

1985:

·      Is recruited by Goldman Sachs to work as a credit analyst in its high yield group in New York City, and within six months becomes head trader.

1992:

·      Leaves Goldman Sachs after being passed over for partner and starts trading his personal account.

1993:

·      Founds Appaloosa Management.

2001:

·      Generates a 61% return by focusing on distressed bonds.

2009:

·      Earns about $7 billion for his hedge fund by buying distressed financial stocks, with $4 billion going to his personal wealth, making him the top-earning hedge fund manager of the year.

2011:

·      Awarded Institutional Hedge Fund Firm of the Year in June.

2013:

·      Donates $67 million to Carnegie Mellon University, leading to the business school being named the Tepper School of Business. Forbes ranks him as the top hedge fund earner of 2012.

2016:

·      Divorces Marlene Tepper.

2018:

·      Purchases the Carolina Panthers for $2.2 billion in May, becoming the owner. Praises President Trump’s corporate tax cuts in January. Awarded an honorary doctorate degree and serves as the keynote speaker at Carnegie Mellon University’s 121st Commencement.

2019:

·      Marries Nicole Bronish.

2020:

·      Donates $2.65 million through the David A. Tepper Foundation to help Chicago with the coronavirus pandemic. His cumulative donations toward COVID-19 relief efforts exceed $22 million in April. Returns a portion of his portfolio to Alibaba and Amazon, making them the largest parts at 13% and 11%, respectively.

2021:

·      Announces a $1 million donation to the Hurricane Ida relief effort through the Nicole & David Tepper Foundation and the David A. Tepper Charitable Foundation in September.

2023:

·      Fined $300,000 by the NFL for throwing a drink at a fan during the Panthers’ game against the Jacksonville Jaguars on December 31.

David Tepper's Investing Principles

I think when it comes to decisions, I try not to be emotional. To drown out the noise and look at the important facts.

David Tepper

There is a time to make money and a time to not lose money

David Tepper

This company looks cheap, that company looks cheap, but the overall economy could completely screw it up. The key is to wait. Sometimes the hardest thing to do is to do nothing.

David Tepper

We keep our cool when others don’t. The point is, markets adapt. People adapt. Don’t listen to all the crap out there.

David Tepper

We don’t really buy high-flyers. We buy before they get high-flyers.

David Tepper

Those who keep their heads while others are panicking do well.

David Tepper

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