Appaloosa Management leader David Tepper (Trades, Portfolio) disclosed his equity portfolio for the second quarter earlier this month.
Known for being a distressed-debt specialist, filings show the billionaire guru’s firm focuses on investing in equities and debt of distressed companies, exchange warrants, options, futures notes and junk bonds. In 2019, Tepper converted his hedge fund into a family office as a result of becoming the owner of the Carolina Panthers NFL football team.
Based on these considerations, the 13F filing for the three months ended June 30 shows Tepper entered 19 new positions, sold out of eight stocks and added to or trimmed a number of other existing investments. Notable trades for the period included a new stake in Advanced Micro Devices Inc. (AMD, Financial), increased bets on Nvidia Corp. (NVDA, Financial), Alibaba Group Holding Ltd. (BABA, Financial) and Microsoft Corp. (MSFT, Financial) as well as a reduction in the Constellation Energy Corp. (CEG, Financial) holding.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Advanced Micro Devices
The guru invested in 2.31 million shares of Advanced Micro Devices (AMD, Financial), allocating 4.88% of the equity portfolio to the stake. The stock traded for an average price of $103.90 per share during the quarter.
It is now his eighth-largest holding.
The Santa Clara, California-based semiconductor company has a $176.08 billion market cap; its shares were trading around $108.98 on Wednesday with a price-book ratio of 3.19 and a price-sales ratio of 8.08.
The GF Value Line suggests the stock is fairly valued currently based on its historical ratios, past financial performance and analysts’ future earnings projections.
At 92 out of 100, the GF Score indicates the company has high outperformance potential on the back of solid ratings for profitability, growth, financial strength and momentum. The value rank, however, is more moderate.
Of the gurus invested in Advanced Micro Devices, Ken Fisher (Trades, Portfolio) has the largest stake with 1.67% of its outstanding shares. Philippe Laffont (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), the Harbor Capital Appreciation Fund (Trades, Portfolio) and Daniel Loeb (Trades, Portfolio) also have notable holdings.
Nvidia
The investor increased the Nvidia (NVDA, Financial) stake by 580%, picking up 870,000 shares. The transaction had an impact of 6.83% on the equity portfolio. Shares traded for an average price of $331.15 each during the quarter.
Tepper now holds 1.02 million shares total, which occupy 8.01% of the equity portfolio and is now his largest holding. GuruFocus estimates he has gained 43% on the investment so far.
Headquartered in Santa Clara, California, the semiconductor chip manufacturer has a market cap of $1.15 trillion; its shares were trading around $465.64 on Wednesday with a price-earnings ratio of 242.52, a price-book ratio of 46.94 and a price-sales ratio of 44.88.
According to the GF Value Line, the stock is significantly overvalued currently.
The GF Score of 83 implies the company has good outperformance potential, driven by solid ratings for profitability, growth and financial strength. The value and momentum ranks, however, are low.
With a 0.63% stake, Baillie Gifford (Trades, Portfolio) is Nvidia’s largest guru shareholder. Fisher, Harbor Capital, Laffont, Frank Sands (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies and Steven Cohen (Trades, Portfolio) also had significant positions.
Alibaba
Tepper boosted the Alibaba (BABA, Financial) position by 4,375%, buying 4.37 million shares. The transaction impacted the equity portfolio by 6.77%. During the quarter, shares traded for an average per-share price of $87.76.
He now holds a total of 4.47 million shares, representing the fifth-largest holding with a weight of 6.92%. GuruFocus data shows he has gained around 17.28% on the investment to date.
The diversified Chinese e-commerce company, which also operates a cloud software business, has a $229.77 billion market cap; its shares traded around $90.24 on Wednesday with a price-earnings ratio of 19.53, a price-book ratio of 1.62 and a price-sales ratio of 1.85.
Based on the GF Value Line, the stock appears to be modestly undervalued currently.
The GF Score of 89 means the company has good outperformance potential, having received high ratings for four of the criteria and a more moderate momentum rank.
David Herro (Trades, Portfolio) is Alibaba’s largest guru shareholder with a 1.48% stake. The stock is also being held by PRIMECAP, Dodge & Cox, Fisher, Loeb and Ron Baron (Trades, Portfolio), among others.
Microsoft
The guru expanded the Microsoft (MSFT, Financial) stake by 376.92%, buying 980,000 shares. The transaction had an impact of 6.20% on the equity portfolio. The stock traded for an average price of $313.01 per share during the quarter.
Tepper now holds 1.24 million shares, giving it 7.84% space in the equity portfolio as the third-largest holding. GuruFocus found he has gained about 12.95% on the investment over its lifetime.
The Redmond, Washington-based tech company, which developed the Windows operating system and Microsft 365 suite of software products, has a market cap of $2.43 trillion; its shares were trading around $327.72 on Wednesday with a price-earnings ratio of 33.82, a price-book ratio of 11.81 and a price-sales ratio of 11.54.
The GF Value Line suggests the stock is fairly valued currently.
Supported by solid ratings for three of the criteria as well as more moderate value and momentum ranks, the GF Score is 95. As such, the company has high outperformance potential.
Holding 0.53% of its outstanding shares, Bill Gates (Trades, Portfolio)’ foundation trust has the largest stake in Microsoft. Fisher, Dodge & Cox, PRIMECAP Management (Trades, Portfolio), Harbor Capital and several other gurus also have large holdings.
Constellation Energy
Tepper slashed the Constellation Energy (CEG, Financial) holding by 76.08%, selling 1.59 million shares. The transaction impacted the equity portfolio by -6.60%. During the quarter, shares traded for an average price of $82.83 each.
He now holds 500,000 shares, accounting for 0.85% of the equity portfolio. GuruFocus says Tepper has gained an estimated 46.02% on the investment.
The utility company headquartered in Baltimore, which provides electric power, natural gas and energy management services, has a $34.91 billion market cap; its shares were trading around $108.59 on Wednesday with a price-earnings ratio of 45.54, a price-book ratio of 3.11 and a price-sales ratio of 1.32.
Since being spun off of Exelon Corp. (EXC, Financial) in February 2022, the stock has climbed over 150%.
The GF Score of 23 warns that the company has poor performance potential. While it received middling marks for financial strength and a low profitability rank, it did not get ratings for the other three criteria. As such, its true prospects may not be fully reflected.
Andreas Halvorsen (Trades, Portfolio) is the company’s largest guru shareholder with a 0.32% stake. Constellation Energy is also being held by Lee Ainslie (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), Simons’ firm, Jeremy Grantham (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Fisher.
Additional trades and portfolio composition
During the quarter, Tepper also established positions in Intel Corp. (INTC, Financial), Qualcomm Inc. (QCOM, Financial), Taiwan Semiconductor Manufacturing Co. (TSM, Financial) and Baidu Inc. (BIDU, Financial), added to the Meta Platforms Inc. (META, Financial) stake and sold out of Salesforce Inc. (CRM, Financial).
The guru’s $5.39 billion equity portfolio, which is composed of 39 stocks, is largely invested in the technology, consumer cyclical and communication services sectors.
