David Tepper (Trades, Portfolio), founder of Appaloosa Management, disclosed this week his top-five positions during the first quarter included new Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) holding Amazon.com Inc. (AMZN, Financial) and Chinese e-commerce giant Alibaba Group Holding Ltd. (BABA, Financial).
Tepper primarily invests in the debt of distressed companies. The manager of the New Jersey-based fund has earned an international reputation for producing strong returns among Wall Street investors.
As of quarter-end, Tepper’s $3.45-billion equity portfolio contains 23 stocks, of which eight represent new holdings. The top-five buys in terms of portfolio weight are Amazon, Alibaba, Salesforce.com Inc. (CRM, Financial), Adobe Inc. (ADBE, Financial) and Clearway Energy Inc. (CWEN, Financial).
Amazon
Tepper added 165,000 shares of Amazon, giving the position 8.51% weight in the equity portfolio. Shares of the Seattle-based e-commerce giant averaged $1,661.42 during the first quarter.
Berkshire CEO Warren Buffett (Trades, Portfolio) said in a May 2 CNBC interview with Becky Quick that while he admired Amazon and its CEO Jeff Bezos, Buffett did not make the trade for the conglomerate. Instead, one of Buffett’s “lieutenants” Ted Weschler or Todd Combs purchased 483,300 shares of the e-commerce giant.
GuruFocus ranks Amazon.com’s profitability 8 out of 10 on several positive indicators, which include expanding profit margins, a four-star business predictability rank and a three-year revenue growth rate that outperforms 91.19% of global competitors.
Other gurus that purchased shares of Amazon.com include Ken Fisher (Trades, Portfolio) and Tom Gayner (Trades, Portfolio).
Alibaba
Having sold 1.5 million shares of Alibaba during fourth-quarter 2018, Tepper purchased a new 700,000-share stake in the Chinese e-commerce giant during the first quarter. Shares averaged $164.79 during the quarter ending March 2019.
The Chinese e-commerce giant said this week that revenues for the 12 months ending March 31 were 376,844 million yuan ($56.15 million), up 51% year-over-year, driven by “robust user growth and engagement across [the company’s] ecosystem,” Chief Financial Officer Maggie Wu said. Alibaba CEO Daniel Zhang mentioned that the company is “becoming synonymous with everyday consumption in China” and that the company’s user base reached 654 million annual active members. The company’s strong revenue growth contributes to a GuruFocus business predictability rank of 3.5 stars and a GuruFocus profitability rank of 9.
Other gurus riding Alibaba’s strong profit momentum include Matthews China Fund (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).
Salesforce.com
Tepper purchased 200,000 shares of Salesforce.com, giving the position 0.92% equity portfolio space. Shares averaged $154.74 during the quarter.
The San Francisco-based company offers customer relationship management applications around sales, customer service, marketing and analytics. GuruFocus ranks Salesforce.com’s profitability 7 out of 10: Although the company’s three-year revenue growth and three-year Ebitda growth outperform over 76% of global competitors, Salesforce.com’s operating margin and return on equity are underperforming more than half of application software companies.
Adobe
Tepper purchased 100,000 shares of Adobe, giving the position 0.77% weight in the equity portfolio. Shares of the company averaged $251.74 during the first quarter.
GuruFocus ranks the San Jose, California-based company’s profitability 9 out of 10 on several strong signs, which include expanding operating margins, a three-year revenue growth rate that outperforms 83.11% of global competitors and a return on equity near a 10-year high of 29.51%.
Philippe Laffont (Trades, Portfolio) also purchased shares of Adobe during the quarter.
Clearway Energy
Tepper purchased 850,000 shares of Clearway Energy, giving the position 0.37% equity portfolio space. Shares averaged $15.04 during the first quarter.
The Princeton, New Jersey-based company owns, operates and acquires contracted renewable and conventional energy generation and thermal infrastructure assets across the U.S. GuruFocus ranks the company’s profitability 6 out of 10: Although the company has a strong Piotroski F-score of 7 and operating margins that outperform 85.58% of global competitors, Clearway Energy’s return on assets and three-year revenue growth underperforms over 80% of global regulated electric companies.
Disclosure: No positions.
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