In this article, we discuss 10 long-term stock picks of David Tepper. If you want to see more stocks in this selection, check out David Tepper Portfolio Holdings: 5 Long-Term Stocks.
In 2019, David Tepper converted his hedge fund, Appaloosa Management, into a family office as he became the owner of the Carolina Panthers NFL football team. Tepper is known as a distressed-debt expert, and he focuses on investing in stocks and debt of distressed companies, exchange warrants, options, futures notes, and junk bonds. As of the third quarter of 2022, the billionaire managed a portfolio worth $1.36 billion, with investments in the consumer discretionary, communications, information technology, healthcare, utilities and telecommunications, and energy sectors.
In October last year, Appaloosa Management’s David Tepper said he was slightly bearish on the stock market, given the uncertainty surrounding interest rates and inflation. He told CNBC’s Halftime Report on October 22, 2021:
“I just don’t know how interest rates are going to behave next year… I don’t think there’s any great asset classes right now… I don’t love stocks. I don’t love bonds. I don’t love junk bonds.”
In 2021, Appaloosa Management said that it has been “probably too conservative” but has done relatively well because of its bets on commodities and oil. In Q3 2022, some of the best long-term stocks to buy according to David Tepper include Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN).
Our Methodology
We selected the 10 stocks which have been part of the Appaloosa’s Q3 2022 portfolio for at least two years or more. Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022 was used to assess the hedge fund sentiment around the securities.
David Tepper Portfolio Holdings: Long-Term Stocks
10. Enterprise Products Partners L.P. (NYSE:EPD)
Number of Hedge Fund Holders: 21
Appaloosa’s Holding Period: 2 Years
Enterprise Products Partners L.P. (NYSE:EPD) is a Texas-based company that provides midstream energy services to producers and consumers of natural gas, natural gas liquids, crude oil, petrochemicals, and refined products. David Tepper added Enterprise Products Partners L.P. (NYSE:EPD) to his portfolio in the last quarter of 2020, and as of Q3 2022, he owns 777,980 shares worth $18.5 million, representing 1.35% of the total 13F securities.
On November 1, Enterprise Products Partners L.P. (NYSE:EPD) reported a Q3 GAAP EPS of $0.62 and a revenue of $15.46 billion, topping Wall Street forecasts by $0.01 and $1.64 billion, respectively. Distributable cash flow grew 16% to $1.9 billion for the third quarter of 2022 compared to $1.6 billion for the third quarter of 2021.
Tudor Pickering analyst Colton Bean on October 18 downgraded Enterprise Products Partners L.P. (NYSE:EPD) to Hold from Buy with a $29 price target.
According to Insider Monkey’s data, 21 hedge funds were long Enterprise Products Partners L.P. (NYSE:EPD) at the end of the third quarter of 2022, compared to 23 funds in the prior quarter. Bruce Berkowitz’s Fairholme (FAIRX) held the largest stake in the company, comprising 3.88 million shares worth $92.3 million.
Like Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN), Enterprise Products Partners L.P. (NYSE:EPD) is one of the long-term holdings of David Tepper.
Here is what Fairholme Capital Management specifically said about Enterprise Products Partners L.P. (NYSE:EPD) in its Q2 2022 investor letter:
“Enterprise Products Partners L.P. (NYSE:EPD) is the largest position in the Fund. Enterprise provides processing and transportation services to producers and consumers of natural gas, natural gas liquids, and oil. These hydrocarbons are critical for modern life and have few, if any, ready substitutes. Commodity prices do not greatly affect the company’s toll road fees. Enterprise is priced at less than nine times distributable cash flows and pays a 7.5% cash distribution.”
9. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 33
Appaloosa’s Holding Period: 6 Years
Energy Transfer LP (NYSE:ET) is headquartered in Dallas, Texas, and the company provides natural gas transportation pipelines and natural gas storage facilities in the United States. Despite Q3 results featuring an EPS and revenue that fell short of Wall Street estimates, Energy Transfer LP (NYSE:ET) declared a $0.265 per share quarterly dividend on October 25, a 15.2% increase from its prior dividend of $0.230. The dividend was paid to shareholders on November 21.
David Tepper’s Appaloosa Management has held a position in Energy Transfer LP (NYSE:ET) since Q2 2017. Securities filings for Q3 2022 reveal that the hedge fund holds 10.20 million shares of the company worth $112.5 million, representing 8.27% of the total securities.
On October 19, Morgan Stanley analyst Robert Kad raised the price target on Energy Transfer LP (NYSE:ET) to $17 from $15 and kept an Overweight rating on the shares. Midstream earnings season is set to begin and the analyst forecasts lesser material earnings beats than in Q3, but “nonetheless largely in-line results.”
According to Insider Monkey’s data, 33 hedge funds were bullish on Energy Transfer LP (NYSE:ET) at the end of Q3 2022, compared to 36 funds in the preceding quarter. David Abrams’ Abrams Capital Management is the largest position holder in the company, with more than 22 million shares worth $242.8 million.
Miller Value Partners, an investment firm, talked about Energy Transfer L.P. (NYSE:ET) in its Q2 2021 investor letter. Here is what the fund said:
“Energy Transfer LP (ET) rose over the period along with the price of oil climbing 40.59% over the period. The company received positive news that the Dakota Access Pipeline project would not be shut down while the Environmental Impact Statement by the US Army Corps of Engineers is drawn up. Energy Transfer reported strong 1Q results with revenue of $17B surpassing expectations for $11.8B with adjusted earnings before income, taxes, depreciation and amortization (EBITDA) hitting $5.04B ahead of consensus of $2.77B. The company raised full year adjusted EBITDA guidance to $12.9-13.3B from $10.6-11.0B previously, with the increase largely related to the benefits realized from Winter Storm Uri. The company paid down $3.7B in debt during the quarter, using strong cash flow to reduce leverage. The company also announced the issuance of $900M in 6.5% Series H perpetual preferreds with the company using the proceeds to repay debt and for general purposes.”
8. EQT Corporation (NYSE:EQT)
Number of Hedge Fund Holders: 57
Appaloosa’s Holding Period: 2 Years
EQT Corporation (NYSE:EQT) is a Pennsylvania-based natural gas production company that owns and operates natural gas, natural gas liquids, and crude oil reserves in the United States. David Tepper initiated a position in EQT Corporation (NYSE:EQT) during the last quarter of 2020, and in Q3 2022, he owned 2.5 million shares worth $102.8 million, representing 7.56% of the total 13F securities.
On October 20, EQT Corporation (NYSE:EQT) declared a quarterly dividend of $0.15 per share, in line with previous. The dividend is distributable on December 1, to shareholders of record on November 9.
Piper Sandler analyst Mark Lear on November 17 raised the price target on EQT Corporation (NYSE:EQT) to $63 from $62 and maintained an Overweight rating on the shares. The analyst updated his exploration and production models and fiscal 2023 outlook following the Q3 earnings season.
According to the third quarter database of Insider Monkey, 57 hedge funds were long EQT Corporation (NYSE:EQT), compared to 52 funds in the earlier quarter. Eric W. Mandelblatt’s Soroban Capital Partners held the leading stake in the company, comprising 6.4 million shares worth $263.6 million.
Here is what ClearBridge Investments Mid Cap Strategy has to say about EQT Corporation (NYSE:EQT) in its Q3 2022 investor letter:
“We also added natural gas company EQT (NYSE:EQT) in the energy sector. As one of the lowest-cost domestic producers, EQT stands to benefit from its position as a leading supplier of natural gas to a world suffering from critically low energy reserves. The Russian invasion of Ukraine and threats to hold natural gas exports hostage have spurred a surge in European energy prices, generating long-term agreements by European countries to purchase U.S. natural gas.
This strong demand and elevated prices have helped EQT strengthen its balance sheet and position it to take advantage as opportunities emerge for natural gas to plug the gaps in the global energy transition from fossil fuels to renewables.”
7. Antero Resources Corporation (NYSE:AR)
Number of Hedge Fund Holders: 65
Appaloosa’s Holding Period: 2 Years
Antero Resources Corporation (NYSE:AR) is a Colorado-based company that acquires, develops, and operates natural gas, natural gas liquids, and oil properties in the United States. Antero Resources Corporation (NYSE:AR) has been part of the David Tepper portfolio since the beginning of 2021. He also invested in the company briefly in the past. In Q3 2022, the billionaire held 1.25 million shares of Antero Resources Corporation (NYSE:AR) worth $38 million, representing 2.8% of the total portfolio.
On October 26, Antero Resources Corporation (NYSE:AR) reported mixed Q3 results. While the EPS missed market consensus, the revenue of $2.06 billion climbed 285.9% year-over-year and beat Wall Street estimates by $80 million. The company also announced a $1 billion increase in its share repurchase authorization.
Jefferies analyst Lloyd Byrne initiated coverage of Antero Resources Corporation (NYSE:AR) on October 19 with a Buy rating and a $47 price target. He believes the “Option Value” of energy is up again, supported by a constrained capital cycle.
According to Insider Monkey’s Q3 data, 65 hedge funds were bullish on Antero Resources Corporation (NYSE:AR), compared to 64 funds in the prior quarter. D E Shaw held the biggest stake in the company, consisting of 3.7 million shares worth $114.18 million.
6. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 105
Appaloosa’s Holding Period: 2 Years
Alibaba Group Holding Limited (NYSE:BABA), the Chinese technology conglomerate, is one of the long-term stocks in the David Tepper portfolio. Securities filings for Q3 2022 reveal that Tepper owned 90,000 Alibaba Group Holding Limited (NYSE:BABA) shares worth over $7 million.
On November 18, UBS analyst Jerry Liu reiterated a Buy recommendation on Alibaba Group Holding Limited (NYSE:BABA) but lowered the price target on the shares to $135 from $140 following its September quarter results. The company is one of several names that represent a “value play” at 9-times expected forward earnings, but investors should understand that growth will slow in the December quarter before improving next year, the analyst wrote in a research note.
According to Insider Monkey’s third quarter database, Alibaba Group Holding Limited (NYSE:BABA) was part of 105 hedge fund portfolios, compared to 106 in the prior quarter. David Blood and Al Gore’s Generation Investment Management is a leading stakeholder of the company, with 4.50 million shares worth $360.7 million.
In addition to Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:META), and Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA) is one of the top stock picks of David Tepper’s Appaloosa Management.
Longleaf Partners made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2022 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA), the largest e-commerce and cloud services provider in China, was the top detractor for the quarter in the face of China and Hong Kong macro concerns. The biggest value driver for Alibaba is domestic consumption, which has been softening in recent months in the face of property sector weaknesses, continuing pressure from the government’s zero-COVID policy and a significant spike in youth unemployment rates (reaching almost 20% in the quarter). We have begun to see some progress, with policies announced to make more financing available to developers to finish uncompleted units. Additionally, COVID containment measures are beginning to ease with Hong Kong recently announcing an end to all quarantine requirements for international arrivals. While we recognize that top-line growth may be constrained in the near term, we believe Alibaba is still well positioned to grow its bottom line at a double-digit rate in coming quarters by reducing costs and reducing spend on strategic initiatives. Our management partners are going on offense through smart capital allocation and increased the buyback authorization in the quarter to $25 billion dollars.”
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Disclosure: None. David Tepper Portfolio Holdings: 10 Long-Term Stocks is originally published Insider Monkey.
