David Tepper sees stock opportunities particularly, in pharmaceuticals, medical devices, and companies leading to the digitalization revolution.
David Tepper’s selective bullish view on stocks is a far cry from his relatively conservative stance just six months ago
“My balls are in my jockstrap” said David Tepper in the wake of late February’s 2020 pandemic stock market crash, the worse since the Great Recession.
“Stock could drop by another 15%” said David Tepper in a piece we wrote entitled, “David Tepper sees further stock declines” posted in March 27.
“My balls are in my jockstrap”
But six months on, fear has somewhat receded, greed is back as David Tepper sees stock opportunities, together with other bargain hunters
CBOE Volatility Index, also known as the fear index, is down 23% over the last three months at 25.68, at the time of writing this piece. The general rule of thumb has been that when the VIX index rises above 30 it indicates serious unease, and a reading above 40 signifies a crisis.
David Tepper sees stock opportunities and they are worth zeroing in on, bearing in mind the billionaire investor who co-founded hedge fund Appaloosa Management in 1993 is considered an investor legend who walks comfortably amongst the world’s investor titans
David Tepper’s Appaloosa Management fund started in 1993 with $57 million in capital, delivered 57% returns on its assets, and grew to $300 million in 1994, $450 million in 1995, and $800 million in 1996. If $1 million were invested at the time of inception, it would have grown to $181 million. Put simply capitalism rewards profitable investors and that is easier said than done.
“CBOE Volatility Index, also known as the fear index, is down 23% over the last three months at 25.68”
WEALTH TRAINING COMPANY
David Tepper sees stock opportunities adding positions in tech behemoths and stocks in the healthcare industry in the wake of the 2020 pandemic stock market crash
Amazon, the online giant, is where David Tepper’s Appaloosa fund is already heavily weighted and is also where David Tepper sees stock opportunities. The fund holds 250,000 shares of (AMZN), which represents 14.9% of David Tepper’s portfolio. The stock price has risen by more than 88% since its March lows.
In the second quarter, AMZN’s net sales increased by 40% year-over-year, and net income increased to $5.2 billion compared to $2.6 billion in the year-ago period. Operating cash flow is also buoyant, up 42% for the trailing twelve months compared to the previous year.
The average revenue estimate of $92.37 billion for the quarter ending September 2020 indicates an increase of 32% over the year-ago quarter. AMZN’s EPS is expected to grow 36% per annum over the next five years.
“Moderna’s stock is flying high, up more than 100% since May” – Wealth Training Company
There have been several positive developments for AMZN lately. For example, Moderna, a Cambridge, Massachusetts-based biotechnology company that specializes in drug development and vaccines has chosen Amazon Web Service as its preferred cloud provider and its standard for analytics and machine learning workloads. Moderna’s stock is flying high, up more than 100% since May.
Moderna used the AWS powered research engine in the Phase 1 trial for its Covid-19 vaccine candidate. The cloud has helped Moderna speed up its manufacturing process and design research experiments.
David Tepper sees stock opportunities also in the Alibaba Group (BABA), a Chinese multinational technology company specializing in e-commerce, retail, Internet, and technology
BABA constitutes 13.49% of David Tepper’s Appaloosa portfolio. BABA stock is up by about 50% since its March lows.
BABA recently announced that it will help accelerate Starbuck’s (SBUX) brand digitalization in China by introducing its mobile order and pay feature “Starbucks Now” on multiple platforms in the Alibaba Digital Economy.
Furthermore, Alibaba Cloud, the official cloud service provider for the Olympics, assisted Paris 2024’s engagement initiative “Le Club Paris 2024” on the website for Olympics and sports fans.
“Alibaba reached a historic landmark with gross merchandise value reaching $1 trillion in its fiscal year ending March 31st, 2020” – Wealth Training Company
Alibaba reached a historic landmark with gross merchandise value reaching $1 trillion in its fiscal year ending March 31st, 2020. Alibaba’s revenue increased by 22%, and earnings per share increased 7% year-over-year, over the same period
Alibaba continues to grow with annual active customers in the China retail space reaching 726 million. The Chinese multinational technology company also has an impressive earnings history with the company beating consensus EPS estimates in each of the trailing four quarters. The market expects the company to report an EPS of $1.99 for the quarter ending June 2020, which represents 12.4% growth over the year-ago number. BABA’s consensus revenue estimate of $21.32 billion for the quarter ending June 2020 indicates a year-over-year increase of 47.5%.
David Tepper sees stock opportunities in Alphabet Inc (GOOGL)
GOOGL has also been a significant addition to David Tepper’s Appaloosa fund since the first quarter of 2012 and accounts for 12.25% of the fund’s total holdings.
Since GOOGL hit its 52-week low of $1008.87 on March 23rd following the 2020 pandemic stock crash the stock has returned about 50%
GOOGL made a recent announcement regarding a long-term partnership between GOOGL and a home security business company-ADT Inc. (ADT). GOOGL has agreed to invest $450 million in the security company in return for a 6.6% stake. The two companies plan to collaborate based on ADT’s services and GOOGL’s Nest hardware. Moreover, both companies have agreed to invest $150 million as part of their partnership for marketing, product development, and employee training.
So, David Tepper sees stock opportunities evolving following the worse global health crisis in a generation. The 2020 pandemic, like those before it could soon be in the rear mirror. Perhaps the worst is over and it is time to start bargain hunting.
Airlines stocks have been beaten down and are starting to show early signs of a comeback
Perhaps some have been too pessimistic about the return of air travel, bearing in mind that it is the younger generation least affected by the pandemic which travels the most. Zoom fatigue is already setting in. So, we could see a V-shaped recovery in air travel. Perhaps the likes of British engine maker, Rolls Royce RR is oversold too at 207 pence, at the time of writing this piece.