David Tepper Stock Portfolio: Top 5 Stock Picks

1. Constellation Energy Corporation (NASDAQ:CEG)

Value of Appaloosa Management‘s 13F Position: $219 Million

Number of Hedge Fund Shareholders: 54

Constellation Energy Corporation (NASDAQ:CEG) is David Tepper’s top stock pick as of September 30 despite him trimming the size of his CEG position by 3% during Q3, which left him with 2.63 million shares. CEG shares soared by 45% during Q3, which boosted the value of Tepper’s holding by more than $74 million. Other funds that profited handsomely from their CEG holdings during Q3 included John Smith Clark’s Southpoint Capital Advisors and William B. Gray’s Orbis Investment Management.

Tepper first built a stake in Constellation Energy Corporation (NASDAQ:CEG) in Q2, one quarter after the company was spun off from Exelon Corporation (NASDAQ:EXC). The market is clearly enamored with the spun-off company’s long-term growth potential in light of the Inflation Reduction Act (IRA), as CEG shares have gained 125% this year despite the company posting modest results in Q3.

The company swung to a loss of $188 million during the quarter compared to a $607 million profit a year prior, and cut the top end of its revenue guidance for the year to $2.65 billion from $2.75 billion. Constellation stands to benefit tremendously from the IRA given its strong foothold in the U.S. nuclear power generation space. Among other things, the IRA will provide lucrative inflation-adjusted tax credits to help fuel the company’s operations and growth.

ClearBridge Investments believes the market is starting to recognize the potential for consolidation in the nuclear sector, which should also benefit Constellation Energy Corporation (NASDAQ:CEG), as the fund discussed in it Q3 2022 investor letter:

“U.S. electric utilities dominated top contributors in the quarter, with Constellation Energy Corporation (NASDAQ:CEG), PG&E (PCG) and NextEra Energy (NEE) at the top of the list. Constellation Energy is primarily a nuclear generation company and is the largest producer of carbon-free electricity in the U.S. Shares are performing well as the market is beginning to understand the potential for consolidation in the nuclear sector, where there is also potential upside from hydrogen.”

For more of the latest stock picks worth considering for your portfolio, check out the 10 Best Biotech Stocks To Buy and the 11 Best Covid Stocks To Invest In.

Disclosure: None.

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