In this article, we discuss the 10 tech stocks to buy according to Billionaire David Tepper. If you want to skip our detailed analysis of Tepper’s history, investment philosophy, and hedge fund performance, go directly to the 5 Tech Stocks to Buy According to Billionaire David Tepper.
Born in Pittsburgh, Pennsylvania, Billionaire David Tepper is regarded as a superstar in the world of hedge funds, famous for his investment in depressed bank securities during the financial crisis, generating a return of 132% in 2009, of which $4 billion went to his own personal wealth, making him the top-earning hedge fund manager that year.
Having started his career as a credits analyst at Goldman Sachs, David Tepper established Appaloosa Management, his own investment fund, after being passed over for a partnership at the firm twice. With an initial investment of $57 million, his fund generated a return of 57.6% in the first year, managing to top the broader market index in the next three years. Tepper is known for investing in distressed debt, alongside bonds and preferred stocks, and converting it into equity ownership.
Appaloosa Management, as an investment firm, manages more than $4.8 billion in its investment portfolio, as of the end of the second quarter. The fund’s portfolio is diversified across 10 principal sectors, with the Technology sector proving to be the heaviest one, making up 33.8% of the total portfolio value. A majority of the companies in the fund’s investment portfolio consist of large-cap companies, with stocks scaling up to more than $10 billion in market capitalization making up 45% of the fund’s total value.
Some of the notable stocks present in the investment portfolio of Appaloosa Management at the end of the second quarter of 2021 include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT) and Micron Technology (NASDAQ:MU), among others discussed in detail below.
Our Methodology
With this background in mind, let us now look towards the 10 tech stocks to buy according to billionaire David Tepper. We made use of Appaloosa Management’s 13F portfolio for the second quarter for this analysis.
Why should we pay attention to David Tepper’s stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
10 Tech Stocks to Buy According to Billionaire David Tepper
10. Visa Inc. (NYSE:V)
Tepper’s Stake Value: $64.3 million
Percentage of David Tepper’s 13F Portfolio: 1.33%
Number of Hedge Fund Holders: 162
Visa Inc. (NYSE:V) is a California-based multinational financial services company that enables electronic funds transfers throughout the world. Ranked tenth on our list of the 10 tech stocks to buy according to Billionaire David Tepper, Visa Inc. (NYSE:V) has a market capitalization of $490.15 billion.
David Tepper’s Appaloosa Management currently owns 275,000 shares of Visa Inc. (NYSE:V), amounting to over $64.3 million in worth, accounting for 1.33% of the fund’s portfolio value. At the end of the second quarter of 2021, 162 hedge funds in the database of Insider Monkey held stakes worth $27.6 billion in Visa Inc. (NYSE:V), down from 164 in the previous quarter with stakes worth $26.5 billion.
The company issued its quarterly earnings report for the second quarter of 2021 in March, with earnings per share at $1.38, beating forecast estimates by $0.11. The company also reported a revenue of $5.73 billion, surpassing predicted revenues by $175.03 million.
In its Q1 2021 investor letter, ClearBridge Investments declared selling off companies that were not as profitable to include Visa Inc. (NYSE:V) to their portfolio. Here is what the fund said:
“To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Visa.”
9. QUALCOMM Incorporated (NASDAQ:QCOM)
Tepper’s Stake Value: $73.3 million
Percentage of David Tepper’s 13F Portfolio: 1.51%
Number of Hedge Fund Holders: 72
QUALCOMM Incorporated (NASDAQ:QCOM) is a multinational corporation that designs and manufactures semiconductors, software, and other services related to wireless technology. The California-based company ranks ninth on the list of the 10 tech stocks to buy according to billionaire David Tepper.
In the second quarter of 2021, QUALCOMM Incorporated (NASDAQ: QCOM) reported an EPS of $1.90, beating estimates by $0.23. The company’s revenue came in at $7.92 billion, up 52.23% year-over-year and beating revenue estimates by $304.53 million.
Appaloosa Management, in its portfolio for the second quarter of 2021, holds 513,000 shares of QUALCOMM Incorporated (NASDAQ:QCOM), worth $73.3 million, representing 1.15% of the fund’s value. By the end of the second quarter of 2021, 72 hedge funds out of the 873 tracked by Insider Monkey held stakes in QUALCOMM Incorporated (NASDAQ: QCOM) worth roughly $4.04 billion. This is compared to 73 hedge funds in the previous quarter with a total stake value of approximately $2.76 billion.
On October 1, Jefferies analyst Kyle McNealy initiated coverage of QUALCOMM Incorporated (NASDAQ:QCOM) with a Hold rating and $137 price target.
Just like Alphabet Inc. (NASDAQ:GOOG), Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Micron Technology (NASDAQ:MU), and Microsoft Corporation (NASDAQ:MSFT), QUALCOMM Incorporated (NASDAQ:QCOM) is one of the most notable stocks in David Tepper’s portfolio.
ClearBridge Investments, in its Q1 2021 investor letter explained why semiconductor companies, including QUALCOMM Incorporated (NASDAQ:QCOM) faced issues. Here is what the fund said:
“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns, and one-off production delays as well as demand resilience in areas like autos and smartphones. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurt wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”
8. Microsoft Corporation (NASDAQ:MSFT)
Tepper’s Stake Value: $84.6 million
Percentage of David Tepper’s 13F Portfolio: 1.75%
Number of Hedge Fund Holders: 238
Microsoft Corporation (NASDAQ:MSFT) is a multinational technology company that specializes in the production of computer software, consumer electronics and computer related services. Ranked eighth on the list of the 10 tech stocks to buy according to billionaire David Tepper, Microsoft Corporation (NASDAQ:MSFT) has a market capitalization of $2.17 trillion.
David Tepper’s hedge fund owns 312,500 shares of Microsoft Corporation (NASDAQ:MSFT), amounting to $84.6 million in worth and representing 1.75% of the fund’s portfolio. Of the 873 hedge funds tracked by Insider Monkey, 238 funds have positions in Microsoft Corporation (NASDAQ: MSFT) in the second quarter of 2021, worth over $62.4 billion.
Microsoft Corporation (NASDAQ:MSFT) announced its earnings for the quarter on July 26th, 2021, with reported earnings per share of $2.17, beating estimates of $1.92. The software giant also reported a revenue of $46.15 billion, compared to estimates of $44.30 billion.
On September 17, Tigress Financial analyst Ivan Feinseth raised his price target on Microsoft Corporation (NASDAQ:MSFT) to $366 from $303 and kept a Buy rating on the shares, as the analyst expects another strong performance of cloud-based services in the quarter.
Baron Opportunity Fund, in its Q2 2021 Investor Letter, expressed its expectations for the solid growth and profitability of Microsoft Corporation (NASDAQ:MSFT). Here is what the fund said:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft was a top contributor in the period because it trades at reasonable free cash flow and earnings valuations, has cloud and digital transformation tailwinds at its back, reported a solid March quarter, and beat Street expectations by a wide margin. Microsoft’s results continued to be strong across the board, with Azure cloud computing revenues up 46% in constantcurrency (“cc”) terms and commercial cloud bookings growth of 38% cc, the best in years. Microsoft also reported robust profitability growth, with operating income expanding 31% and GAAP earnings up 45%. We believe the company is well positioned for continued solid growth and profitability through market share gains as more companies look to transform and digitize their businesses as they move operations to the cloud.”
7. Twitter Inc. (NYSE:TWTR)
Tepper’s Stake Value: $89.4 million
Percentage of David Tepper’s 13F Portfolio: 1.85%
Number of Hedge Fund Holders: 89
Twitter, Inc. (NYSE:TWTR) is a social networking and microblogging company that provides a platform for users to interact in real-time. The networking company has a market capitalization of $49.46 billion and is ranked seventh on the list of the 10 tech stocks to buy according to billionaire David Tepper.
On July 22, Twitter, Inc. (NYSE:TWTR) reported an EPS of $0.20, beating the market consensus by $0.13. Additionally, the company also generated revenues amounting to $1.19 billion, crossing estimates revenues by $126.56 million.
According to the recent 13F Filings, Appaloosa Management holds 1.3 million shares of Twitter, Inc. (NYSE:TWTR), amounting to $89.4 million in worth and accounting for 1.85% of the fund’s investment portfolio. As of the second quarter of 2021, 89 hedge funds tracked by Insider Monkey have positions in Twitter, Inc. (NYSE:TWTR), worth over $6.03 billion, compared to 107 hedge funds in the first quarter, worth $4.53 billion.
In its Q2 2021 investor letter of ClearBridge Investments, the fund considers Twitter, Inc. (NYSE:TWTR) an improving growth story. Here is what the fund said:
“Not every portfolio company will neatly fit into one of these four growth segments and some may move from one to another over time. Social media platform Twitter could be considered an improving growth story due to the initiatives put in place to grow and better monetize its user base. With the global return of live events and sports causing a rebound in advertising, combined with other new services beginning to thrive, this is a company with the fundamentals to be categorized as a disruptor.”
6. Uber Technologies Inc. (NYSE:UBER)
Tepper’s Stake Value: $101.9 million
Percentage of David Tepper’s 13F Portfolio: 2.11%
Number of Hedge Fund Holders: 135
Uber Technologies, Inc. (NYSE:UBER) more commonly known simply as Uber, is a technology company that provides transportation, food delivery, package delivery and courier services. The company has a market capitalization of $88.66 billion, and is ranked sixth on the list of the 10 tech stocks to buy according to billionaire David Tepper.
Uber Technologies, Inc. (NYSE:UBER) released its quarterly earnings report for the second quarter of 2021 on August 4. The declared earnings per share by the company was $0.58, beating the consensus estimates by $1.07. The revenue generated was $3.93 billion, which beat the market estimated revenue of $3.76 billion by $167.18 million.
David Tepper presently holds over 2 million shares of Uber Technologies, Inc. (NYSE:UBER), worth over $101.9 million, and representing 2.11% of his hedge fund’s total investment portfolio. By the end of the second quarter of 2021, 135 hedge funds out of the 873 tracked by Insider Monkey held stakes in Uber Technologies, Inc. (NYSE:UBER), worth $10.4 billion, up from 130 hedge funds in the preceding quarter that had a total stake value of approximately $1.05 billion.
In its Q2 2021 investor letter, RiverPark Funds, an investment fund, states that Uber Technologies (NYSE:UBER) was their top detractor for the second quarter of 2021. Here is what the fund said:
“UBER was our top detractor for the quarter. Delivery growth remains strong, and ride-sharing has started to recover, though still down year over year (vs. pre-COVID results). Gross bookings grew 24% year over year, driven by 166% Delivery growth.
Despite the COVID disruption, UBER remains the undisputed global leader in ride-sharing, with greater than 50% share in every major region in which it operates. The company is also a leader in food delivery (64% of 1Q21 revenue), where it is number one or two in the more than 25 countries in which it operates. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its more than 100 million users (by comparison, Amazon Prime has 130+ million members) and penetrate new markets of ondemand services, such as grocery delivery, truck brokerage and worker staffing for shift work. Its New Verticals (non-food delivery such as grocery, convenience, and alcohol) business hit a $3 billion annualized run rate in March, up 77% quarter over quarter.
UBER, at its current $91 billion market capitalization, trades at 4x next year’s revenue from its two core businesses. Additionally, the company has substantial, unrecognized, value in its several nascent development businesses and another $13 billion in equity stakes in synergistic businesses around the world.”
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Disclosure: None. 10 Tech Stocks to Buy According to David Tepper is originally published on Insider Monkey.
