David Tepper Portfolio Holdings: 5 Long-Term Stocks

In this article, we discuss 5 long-term stock picks of David Tepper. If you want to see more stocks in this selection, check out David Tepper Portfolio Holdings: 10 Long-Term Stocks. 

5. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 110

Appaloosa’s Holding Period: 6 Years

UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified healthcare company in the United States. David Tepper has been a long-term position holder in the company, and as of the third quarter of 2022, he owns 150,000 shares of UnitedHealth Group Incorporated (NYSE:UNH) worth $75.75 million, representing 5.56% of the total 13F securities. 

On November 4, UnitedHealth Group Incorporated (NYSE:UNH) declared a quarterly dividend of $1.65 per share, in line with previous. The dividend is distributable on December 13, to shareholders of record on December 5. UnitedHealth Group Incorporated (NYSE:UNH)’s dividend yield on November 22 came in at 1.28%. 

Raymond James analyst John Ransom on November 21 downgraded UnitedHealth Group Incorporated (NYSE:UNH) to Outperform from Strong Buy with a $615 price target. UnitedHealth Group Incorporated (NYSE:UNH) has the biggest Medicare Advantage book in the industry, along with an increasing risk-bearing business in OptumHealth which would be impacted by possible negative outcomes in Medicare Advantage, the analyst wrote in a research note. However, the analyst believes UnitedHealth Group Incorporated (NYSE:UNH)’s diverse set of revenue channels, inorganic growth, and FFS exposure in Optum can help protect them from these problems.

According to Insider Monkey’s data, 110 hedge funds were bullish on UnitedHealth Group Incorporated (NYSE:UNH) at the end of Q3 2022, compared to 91 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading position holder in the company, with 3.2 million shares worth $1.6 billion. 

In its Q2 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and United Group Incorporated (NYSE:UNH) was one of them. Here is what the fund said:

“UnitedHealth Group Incorporated (NYSE:UNH) reported solid quarterly results and raised 2022 guidance modestly. Additionally, managed care is another industry that is viewed as defensive in the current environment, which helped support UnitedHealth and its peer group.”

4. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 156

Appaloosa’s Holding Period: 7 Years

Alphabet Inc. (NASDAQ:GOOG) has been part of the David Tepper portfolio since the last 7 years. The billionaire initiated a position in Alphabet Inc. (NASDAQ:GOOG) in the third quarter of 2015, and as of Q3 2022, he held approximately 2 million shares worth $191.8 million, representing 14.09% of the total portfolio. David Tepper boosted his stake in Alphabet Inc. (NASDAQ:GOOG) by a whopping 1895% in Q3 2022. 

On October 27, Alphabet Inc. (NASDAQ:GOOG) announced the acquisition of AI avatar startup Alter for about $100 million. Alter enables creators and brands to express their virtual identity. This will allow Alphabet Inc. (NASDAQ:GOOG) to improve its content offerings.

Morgan Stanley analyst Brian Nowak on November 15 maintained an Overweight rating on Alphabet Inc. (NASDAQ:GOOG) but lowered the price target on the shares to $120 from $125. He trimmed his 2023 U.S. online advertising and e-commerce forecasts and now expects about 6% and 5% growth, respectively, in online advertising and e-commerce.

According to Insider Monkey’s Q3 data, 156 hedge funds were bullish on Alphabet Inc. (NASDAQ:GOOG), compared to 153 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the largest stakeholder of the company, with 52.4 million shares worth $5 billion. 

Here is what Mayar Capital has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q3 2022 investor letter:

“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?

“Google it!”

This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.

Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to’ something. Second, the reason Biden’s advice was met with such opprobrium was because Googling something has become almost second nature to us now.

These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.

Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate’ is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate’ as well as that from its other properties such as Mail, Maps, and so on, totaled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…” (Click here to see the full text)

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

Number of Hedge Fund Holders: 177

Appaloosa’s Holding Period: 6 Years

Meta Platforms, Inc. (NASDAQ:META) has been part of David Tepper’s Appaloosa Management since the last 6 years. In the third quarter of 2022, David Tepper held 875,000 shares of Meta Platforms, Inc. (NASDAQ:META) worth $118.72 million, representing 8.72% of the total 13F portfolio. 

On November 15, Meta Platforms, Inc. (NASDAQ:META) filed to exchange up to $2.75 billion of 3.500% senior notes due 2027. The filing also indicates an offering to exchange $3 billion of 3.850% senior notes due 2032, $2.75 billion of 4.450% senior notes due 2052, and $1.5 billion of 4.650% senior notes due 2062. Interest on the exchange notes will be paid bi-annually in arrears on February 15 and August 15 every year, starting on February 15, 2023.

Morgan Stanley analyst Brian Nowak on November 15 maintained an Equal Weight rating on Meta Platforms, Inc. (NASDAQ:META) but slashed the firm’s price target on the shares to $100 from $105, citing a weak ad market. 

According to Insider Monkey’s data, 177 hedge funds were long Meta Platforms, Inc. (NASDAQ:META) at the end of Q3 2022, compared to 185 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is a prominent stakeholder of the company, with 11.8 million shares worth $1.60 billion.

ClearBridge Investments made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q3 2022 investor letter:

“We initiated a new position in Meta Platforms, Inc. (NASDAQ:META), in the communication services sector, which operates the Facebook and Instagram social media platforms and is a leading digital advertising provider. We have been carefully watching the company over the last few quarters and believe headwinds from lower monetizing in Facebook and Instagram Reels and pressures from consumer privacy measures are poised to lessen. We believe the company has begun to fully acclimate to this new environment, will achieve greater effectiveness in Reels monetization and find ways to adapt to new privacy standards which will rebound advertising efficiency. Combined with a greater focus on cost control, we believe these initiatives will help contribute to further margin expansion and leave the company well-positioned moving forward.”

2. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Appaloosa’s Holding Period: 3 Years

David Tepper has held a position in Microsoft Corporation (NASDAQ:MSFT) for the last three years. Securities filings for the third quarter of 2022 reveal that David Tepper’s Appaloosa Management held 235,000 shares worth $54.7 million, representing 4.02% of the total securities. 

Macquarie analyst Sarah Hindlian-Bowler on November 2 initiated coverage of Microsoft Corporation (NASDAQ:MSFT) with a Neutral rating and a $234 price target. The analyst sees short-term headwinds for Microsoft Corporation (NASDAQ:MSFT) from a deterioration in the macro environment, cloud pull-in from COVID, soft PC sales, soaring energy costs, and a weak consumer.

According to Insider Monkey’s Q3 data, 269 hedge funds were bullish on Microsoft Corporation (NASDAQ:MSFT), up from 258 funds in the prior quarter. Bill & Melinda Gates Foundation Trust is the largest stakeholder of the company, with 39.2 million shares worth $9.14 billion. 

Diamond Hill made the following comment about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter:

“Also among our bottom contributors were media and technology giant Alphabet, software and IT services provider Microsoft Corporation (NASDAQ:MSFT) and insurance company American International Group (AIG). Microsoft shares declined in Q3, along with other tech companies, as rising interest rates impacted the near-term outlook. We expect the business to continue to generate strong revenue growth and benefit from operating leverage. Microsoft’s cloud computing services business, Azure, is generating robust growth, confirming its competitive positioning.”

1. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 269

Appaloosa’s Holding Period: 4 Years

David Tepper’s Appaloosa Management has held a stake in Amazon.com, Inc. (NASDAQ:AMZN) for the last 4 years. In Q3 2022, the hedge fund owned 1.45 million shares of Amazon.com, Inc. (NASDAQ:AMZN) worth $163.85 million, representing 12.04% of the total 13F securities. 

On November 21, heading towards Thanksgiving and Cyber 5 weekend, JPMorgan analyst Doug Anmuth is worried about online holiday sales growth given the weakening consumer discretionary spending. He forecasts U.S. online holiday sales to increase 7.5% year-over-year, below last year’s 9.7% growth during Q4. Amazon.com, Inc. (NASDAQ:AMZN) maintains 40% share of U.S. e-commerce and seems well positioned after doubling its fulfillment network and workforce since the pandemic began, the analyst contended. Amazon.com, Inc. (NASDAQ:AMZN) stock remains the analyst’s best idea.

According to Insider Monkey’s data, 269 hedge funds were long Amazon.com, Inc. (NASDAQ:AMZN) at the end of Q3 2022, compared to 252 funds in the preceding quarter. Jaime Sterne’s Skye Global Management is one of the largest stakeholders of the company, with 15.5 million shares worth $1.75 billion. 

Baron Funds made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2022 investor letter:

“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest e-commerce retailer and cloud services provider. Shares of Amazon increased 6% in the quarter after the company reported strong results with 7% year-over-year revenue growth driven by 33% growth in Amazon Web Services (AWS), Amazon’s leading cloud computing service, while guiding for an acceleration in third quarter revenue growth, which is expected to be between 13% and 17% year-over-year. Amazon’s share of e-commerce is roughly 40%, far ahead of competition, yet domestic e-commerce accounted for only 14.5% of total retail sales (according to U.S. Census Bureau data for the second quarter of 2022), implying durable growth opportunities ahead. Internationally, the opportunity remains large as Amazon still has less than a 2% market share of international retail spending. Its advertising share is also only 3% and growing, underpinned by the structural closed-loop systems it enables (merchants know exactly whether their ad dollars resulted in a purchase since they are all done on the Amazon platform), which enables accurate targeting and measurement. Lastly, AWS has a good runway for growth as the industry still represents only 9.5% out of the $4.3 trillion of global IT spending according to Gartner. Areas such as logistics and health care present additional optionality.”

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