In this article we present the list of Billionaire David Tepper’s 10 Long-Term Stock Picks.
David Tepper’s Appaloosa Management is a multi-billion dollar hedge fund that was co-founded by billionaire Carolina Panthers owner Tepper in 1993. The fund was initially launched with a focus on distressed debt, which Tepper had years of experience in following a seven-year run as a credit analyst and head trader at Goldman Sachs.
Appaloosa quickly built a name for itself on the backs of those distressed equities and Tepper’s aggressive investment style, returning 57% within its first six months of operation and has delivered impressive compound returns of greater than 25% since inception. It was managing $800 million in assets within five years of launching, which has since grown to $16.8 billion as of late 2023.
That figure would be much greater if not for the fact that Tepper began transitioning his fund into a family office in 2019, beginning the process of returning money to outside investors. By 2022, nearly 90% of Appaloosa’s assets were owned by either Tepper, his family, or Appaloosa employees.
Appaloosa’s 13F portfolio contained just 38 long positions heading into the final quarter of 2024, and was valued at $6.73 billion, up from $6.18 billion at the end of June. The fund added four new positions to its portfolio during Q3, while unloading three former holdings.
Tech stocks held a dominant position in the fund’s portfolio for the third straight quarter, accounting for 38.5% of its value. The fund also had significant exposure to both communications and consumer discretionary stocks, at 24.6% and 23.1% respectively.
Appaloosa’s exposure to various sectors was markedly different just five quarters earlier, when tech stocks accounted for just 7.1% of its 13F portfolio, while energy and utilities stocks came in at 15% and 21.7% respectively. The fund also had much greater exposure to healthcare stocks at that time, which accounted for 9.2% of its portfolio value, compared to just 2.4% at the end of September 2024.
Of particular note is not just the sector allocations of Tepper’s fund, but also where those stocks originate from. Appaloosa’s top two stock picks are both Chinese stocks, as are 4 of its top 12 equity holdings. The fund has also built a stake in a major Chinese large-cap ETF. The bulk of those China-based additions to Appaloosa’s portfolio have come within the past five quarters, just ahead of major stimulus initiatives and economic policy shifts by the Chinese government that have helped spur in a rebound in the world’s second-largest economy.
In a September interview on CNBC’s Squawk Box, Tepper noted that despite some recent gains in Chinese stocks, they are still trading significantly below past valuations and at just single-digit earnings multiples despite double-digit growth rates. He contrasted that to the S&P trading at a 20+x multiple to highlight the ongoing attractiveness of Chinese stocks. Tepper added that the Chinese government has exceeded expectations when it comes to its stimulus plans, which should bode very well for the Chinese economy in the months and years to come.
Given Appaloosa’s highly concentrated portfolio and the relatively short timeframes with which it overhauls its holdings, there is notable value in focusing on those stocks that the fund has held on to for several years. In this article, we’ll look at billionaire David Tepper’s 10 long-term stock picks, all of which have been held by Appaloosa for at least three years.
Our Methodology
The following data is gathered from Appaloosa Management’s latest 13F filing with the SEC.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). That’s why you should pay close attention to this important indicator.
Note: All hedge fund data is based on the exclusive group of 900+ active funds tracked by Insider Monkey that filed 13Fs for the Q3 2024 reporting period.
Billionaire David Tepper’s 10 Long-Term Stock Picks
10. MPLX LP (NYSE:MPLX)
Value of Appaloosa Management’s 13F Position (9/30/2024): $25.7 million
Number of Hedge Fund Shareholders (9/30/2024): 9
David Tepper has held shares of midstream energy services company MPLX LP (NYSE:MPLX) since Q4 of 2020 and was one of just nine shareholders of the stock as of September 30 among the exclusive group of hedge funds tracked by Insider Monkey. Appaloosa Management lowered its stake in MPLX by 6% during Q3 to 578,500 shares.
Despite the limited smart money ownership, you don’t need to squint very hard to see what David Tepper likes about MPLX LP (NYSE:MPLX), beginning with the company’s robust dividend, which yields 7.3%. The strong dividend payment growth has been supported via a 7.7% compound annual raise in the company’s distributable income since 2020. MPLX also has an exciting roadmap for future growth, with several pipeline projects expected to come online over the next two years, including the Blackcomb and Rio Bravo pipelines.
While some analysts are cautious on midstream stocks in 2025, citing robust valuations, several analysts nonetheless have buy-equivalent ratings on MPLX LP (NYSE:MPLX), including Wells Fargo, RBC Capital, and Truist, all of which have price targets on MPLX ranging between $52 and $55. Truist is particularly bullish on the company’s exposure to both the Permian and Marcellus basins, which have some of the best growth rates in the industry.
9. Antero Resources Corporation (NYSE:AR)
Value of Appaloosa Management’s 13F Position (9/30/2024): $50 million
Number of Hedge Fund Shareholders (9/30/2024): 39
Energy companies make up nearly half of David Tepper’s top long-term stock picks, including natural gas exploration and production company Antero Resources Corporation (NYSE:AR), which the billionaire’s hedge fund has been a shareholder of since Q1 of 2021. While Antero is more popular than MPLX among hedge funds, ownership of the stock has fallen by 43% since mid-2022.
Antero Resources Corporation (NYSE:AR) grew its free cash flow after dividends to $40 million in Q3, a 32% year-over-year increase and has generated $350 million in free cash flow over the past two years. The company is using those funds to lower its leverage, which stands at 3.1x as of September 30 and is anticipated to fall below 3x by the end of 2024. CFO Brendan Kreuger has indicated the company will consider entering the buyback market next year should it achieve its target leverage.
Antero Resources Corporation (NYSE:AR) is also in line for a $248 million payout from Veolia Water Technologies after it launched a lawsuit against the company for breach of contract and fraud. That lawsuit was successfully concluded in early 2023, though the timing of the payment is still in the court’s hands and uncertain according to Kreuger. Antero will assess its debt position at the time of payment to determine how the funds should be allocated.
