Billionaire David Tepper’s 10 Long-Term Stock Picks

3. Meta Platforms, Inc. (NASDAQ:META)

Value of Appaloosa Management’s 13F Position (9/30/2024): $358 million

Number of Hedge Fund Shareholders (9/30/2024): 239

Appaloosa cut its Meta Platforms, Inc. (NASDAQ:META) stake by 34% in Q3 to 625,000 shares, taking profits following a big year for the social media giant’s stock, which has gained 72% in 2024. META shares have gained 417% since the end of Q1 2016, when Appaloosa first built a stake in the company. Smart money ownership of META has risen during seven of the past eight quarters after hitting a five-year low in Q3 2022.

As with Alphabet, Meta Platforms, Inc. (NASDAQ:META) is also rapidly developing and expanding its AI capabilities, which has investors excited about the potential for growth and efficiency boosts in the company’s operations. Meta’s revenue grew by 19% year-over-year in Q3 to $40.6 billion, thanks in part to AI recommendations boosting the amount of time users spend on Meta’s Facebook and Instagram platforms by 8% and 6% respectively.

Meta’s earnings growth was even more impressive in Q3, jumping by 37% to $6.03 per share, and analysts anticipate strong double-digit earnings growth (18%) for the next five years as AI continues to improve ad conversion on the platform and the company further develops and monetizes some of its less heralded assets like WhatsApp and the Metaverse.

Hardman Johnston Global Equity feels more comfortable owning Meta Platforms, Inc. (NASDAQ:META) now given the company’s more proactive approach to data and privacy protection, as the fund shared in its Q3 2024 investor letter:

“During the quarter, we initiated one new position in Meta Platforms, Inc. (NASDAQ:META) and had no liquidations. Management at Meta has effectively addressed concerns about investment efficiency by shifting resources from Reality Labs towards broader AI initiatives with a clearer path to profitability. We believe management has successfully articulated the benefits of this strategy, highlighting how AI is driving user engagement and advertiser productivity. This, in turn, fuels continued revenue momentum and increases the likelihood of positive earnings surprises in the future. Additionally, the parent company of the social media platform, Facebook, has recently taken positive steps to enhance safety, which suggests to us a shift towards a more proactive and responsive approach to addressing important potential challenges and concerns. Weak oversight over data privacy protection was a key reason why we sold the position in the portfolio back in 2021. Removing this governance overhang allows us to feel comfortable to enter back into the stock at a time when we believe it is poised for strong earnings growth going forward.”