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Billionaire David Tepper is Selling These 10 Stocks

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·12 min read
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In this article, we discuss the 10 stocks Billionaire David Tepper is selling. If you want to skip our detailed analysis of Tepper's history, investment philosophy, and hedge fund performance, go directly to Billionaire David Tepper is Selling These 5 Stocks.

Legendary investor, philanthropist and co-founder of the public equity investment fund Appaloosa Management, David A. Tepper specializes in distressed debt investments. After earning his B.A in Economics from the University of Pittsburgh in 1978, and his M.B.A from the David A. Tepper School of Business at Carnegie Mellon University in 1982, named after the famed investor following his generous donation of $55 million to the institute in 2003, Tepper began his career in finance, serving as a securities analyst at Equibank and as a financial analyst at Republic Steel later on. In 1982, Tepper was recruited by Keystone Mutual Funds, where he earned much of his experience in financial management. In 1985, he began his career with Goldman Sachs as a credit analyst, advancing on to the high-yield desk as its head trader, primarily focusing on bankruptcies and junk bonds. After being passed over for partnership at Goldman twice, Tepper left the financial services company, and established his own hedge fund in 1993.

According to the most recent 13F filings, Appaloosa Management, as an investment firm, manages more than $4.8 billion in its investment portfolio. The fund's portfolio is diversified across 10 principal sectors, with the Technology sector being the largest one. A majority of the companies in the fund’s investment portfolio consist of large-cap companies with stocks scaling up to more than $10 billion in market capitalization, making up 45% of the fund’s total value.

Some of the top stocks present in the investment portfolio of Appaloosa Management at the end of the second quarter of 2021 include Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT), among others.

Billionaire David Tepper is Selling These 10 Stocks
Billionaire David Tepper is Selling These 10 Stocks

David Tepper of Appaloosa Management

Our Methodology

With this background in mind, let us now look towards the 10 stocks billionaire David Tepper is selling. We made use of Appaloosa Management's 13F portfolio for the second quarter for this analysis. The following list consists of stocks that the hedge fund sold off completely in the second quarter of 2021.

Why should we pay attention to David Tepper's stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Billionaire David Tepper is Selling These 10 Stocks

10. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 112

The Walt Disney Company (NYSE:DIS), more commonly known as Disney, is a multinational mass media and entertainment conglomerate. Headquartered in California, the company has a diversified interest in entertainment, operating multiple international theme parks, as well as a number of film holdings. The mass media company is ranked tenth on the list of the 10 stocks David Tepper is selling.

Appaloosa Management sold its entire stake in The Walt Disney Company (NYSE:DIS) by the end of the second quarter period.

In the second quarter of 2021, The Walt Disney Company (NYSE:DIS) reported an EPS of $0.79, beating estimates by $0.53. The company’s revenue in the quarter, however, was $15.61 billion, falling short of the revenue estimates by $318.33 million.

At the end of the second quarter of 2021, 112 hedge funds in the database of Insider Monkey held stakes worth over $10.8 billion in The Walt Disney Company (NYSE:DIS). This is compared to 134 hedge funds in the previous quarter with stakes worth approximately $12.5 billion.

Unlike Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT), The Walt Disney Company (NYSE:DIS) is a stock that David Tepper is selling.

In its Q2 2021 investor letter, RiverPark Funds mentioned The Walt Disney Company (NYSE:DIS) and discussed its stance on the firm. Here is what the fund said:

DIS shares declined for the quarter, taking a pause after a big fourth quarter and first quarter stock price advance, as Disney+ subscriber numbers were disappointing to investors. Disney+, the company’s DTC streaming business, had blown past previous subscriber projections, having gone from zero to 104 million in 17 months, but investors were now expecting 109 million subscribers. Management still expects significant continued growth to 230-260 million subscribers in 2024.

DIS is blessed with a deep library of unique content that includes both live sports (providing large, non-time shifted audiences) and incomparable brands including Disney, Marvel, Pixar, and Lucasfilm, as well as the ABC network. The company also has a wealth of upcoming new content, expecting over 100 original titles per year, including two new Star Wars spin-off series, 10 Star Wars films, 10 Marvel films, 15 Disney and Pixar films, and 15 Disney and Pixar series.

Now that the disruption in its theme park, cruise, and theatrical businesses appears to be coming to an end, we believe that Disney is among the best-positioned media companies in the new landscape to combine multi-channel and DTC distribution. We also note that DIS has an extremely strong balance sheet and a growing pool of free cash flow to be used both to return to shareholders and to invest in future opportunities.”

9. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 85

Shopify Inc. (NYSE:SHOP) is a multinational e-commerce company based in Ontario. The company provides an e-commerce platform for online stores and retail point-of-sale systems. Ranked ninth on the list of the 10 stocks David Tepper is selling, Shopify Inc. (NYSE:SHOP) has a market capitalization of $168.53 billion

By the end of the second quarter, Appaloosa Management sold off its entire stake in the company.

In the second quarter of 2021, Shopify Inc. (NYSE:SHOP) had an actual EPS of $2.24, beating estimates by $1.28. Shopify Inc. (NYSE:SHOP) also reported revenues amounting to $1.12 billion, up 56.71% year over year, beating estimates by $69.15 million.

By the end of the second quarter of 2021, 85 hedge funds out of the 873 tracked by Insider Monkey held stakes in Shopify Inc. (NYSE:SHOP) worth roughly $13.97 billion. This is compared to 91 hedge funds in the previous quarter with a total stake value of approximately $9.98 billion.

On September 29, Baird analyst Colin Sebastian lowered his price target on Shopify Inc. (NYSE:SHOP) to $1650 from $1700.

In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Shopify Inc. (NYSE:SHOP). Here is what the fund said:

Shopify (is one of the) companies that have become go-to platforms for small and medium size businesses (SMBs) engaged in e-commerce and social media marketing, rebounded strongly in the quarter after being caught in the selloff among high-multiple growth names since Vaccine Monday. These and the portfolio’s other disruptors had thrived through the first part of the pandemic, leading us to trim positions into strength and reallocate cash into more attractively priced evolving opportunities and steady compounders that had been overly punished by lockdowns and a drop in economic activity.”

8. Salesforce.com, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 108

Salesforce.com, Inc. (NYSE:CRM) is a cloud-based software company headquartered in San Francisco, California. The company provides a diverse set of services, including customer service, application development and analytics. The company has a market capitalization of $269.48 billion and ranks eighth on the list of the 10 stocks David Tepper is selling.

David Tepper's hedge fund sold its entire stake in Salesforce.com, Inc. (NYSE:CRM) in the second quarter of 2021.

The company last released its earnings report on August 24, 2021, with a reported earning of $1.48 per share on an adjusted basis, beating the consensus forecast of $0.93 per share by $0.55. The company also reported a revenue of $6.34 billion for that quarter.

At the end of the second quarter of 2021, 108 hedge funds in the database of Insider Monkey held stakes worth $11.7 billion in Salesforce.com, Inc. (NYSE:CRM), compared to 91 hedge funds in the previous quarter with stakes worth $8.8 billion.

On September 24, RBC Capital analyst Rishi Jaluria raised the his price target on Salesforce.com, Inc. (NYSE:CRM) to $325 from $310 and kept an Outperform rating on the shares.

Unlike Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT), Salesforce.com, Inc. (NYSE:CRM) is one of the stocks David Tepper is selling.

In the Q2 2021 investor letter of RV Capital Management, the fund mentioned Salesforce.com, Inc. (NYSE:CRM). Here is what the fund said:

Part 5: A New Investment in Salesforce.com

The assertion that mega caps can also be mispriced is a good segue to our second new investment in Salesforce.com. Salesforce is one of the largest software companies in the world with a market value of around US$ 250 bn. It is best known for its customer relationship management or “CRM” solution, known as its Sales Cloud. It has three additional clouds (“Service,” “Marketing” and “Commerce”) as well as a thriving platform business with both owned and 3rd party software solutions.

I first came across Salesforce in 2013. I was invested in Bechtle, a German company that provides companies with their in-house IT. I kept hearing about a strange new concept called “the Cloud” and wanted to get up to speed on the topic in case it was a risk to Bechtle. As a result, I picked up a copy of “Behind the Cloud”. It documents how Salesforce.com pioneered cloud-based software and revolutionised the software industry.

Since then, I have followed Salesforce from a distance and visited it several times in San Francisco. I did not consider it seriously as an investment though as for much of the period, I had not yet overcome my aversion to loss-making companies.

This changed in December last year when Salesforce announced the acquisition of Slack (a former investment of the Business Owner Fund, described in my 2020 half-year letter) for US$ 27 bn. On the date of announcement, Salesforce’s market value fell by around US$ 20 bn. Effectively, the market was saying that Slack was almost worthless, which, as an enthusiastic owner of Slack, I disagreed with. Initially, I decided to keep our Slack stock and roll it into Salesforce (as part of the consideration was in Salesforce’s own stock). As Salesforce’s price fell further in the subsequent months, I bought its stock directly to make it a full-size position post the closing of the Slack acquisition…” (Click here to see the full text)

7. PayPal Holdings, Inc. (NASDAQ:PYPL)

Number of Hedge Fund Holders: 143

Paypal Holdings, Inc. (NASDAQ:PYPL) is a multinational financial technology company that enables online payment systems in a number of countries across the globe. Ranked seventh on the list of the 10 stocks David Tepper is selling, PayPal Holdings, Inc. (NASDAQ:PYPL) has a market capitalization of $310.73 billion.

Appaloosa Management sold its entire stake in PayPal Holdings, Inc. (NASDAQ:PYPL) by the end of the second quarter period.

At the end of the second quarter of 2021, 143 hedge funds in the database of Insider Monkey held stakes worth $16.3 billion in PayPal Holdings, Inc. (NASDAQ:PYPL). The number of hedge funds with stakes in the company remained unchanged for the first and second quarter.

The company issued its quarterly earnings report for the second quarter of 2021 on July 28, with reported earnings per share at $1.15, crossing market estimates by $0.03. On the other hand, however, the generated revenues for the quarter fell short of the consensus estimates by $33.77 million.

Qualivian Investment Partners mentioned PayPal Holdings, Inc. (NASDAQ:PYPL) in the Q2 2021 investor letter and discussed its stance on the firm. Here’s what the fund said:

PayPal: The company reported a slightly disappointing quarter with revenues growing 19%, missing on the average revenue per transaction due to the accelerated decline in eBay transactions, the higher mix of Braintree transactions, and other impacts from hedging and F/X translations. Given the stock’s significant outperformance in 2020 and heightened expectations coming into the quarter, the stock has been consolidating since the earnings report. Long term we remain bullish on PayPal, given the company’s continued growth in eCommerce end markets, as well as the continued share gains of digital payments/wallets over paper payments.”

6. Liberty Media Acquisition Corporation (NASDAQ:LMACA)

Number of Hedge Fund Holders:

Liberty Media Acquisition Corporation (NASDAQ:LMACA) is a blank check company that provides capital stock exchange, asset acquisition and stock purchase, among other services. Ranked sixth on the list of the 10 stocks David Tepper is selling, Liberty Media Acquisition Corporation (NASDAQ:LMACA) has a market capitalization of $722.34 million.

With a 100% reduction in stakes in the second quarter, Appaloosa Management sold off all the shares it held of Liberty Media Acquisition Corporation (NASDAQ:LMACA).

Out of the Hedge Funds being tracked by Insider Monkey, Seth Klarman's Baupost Group is a leading shareholder of Liberty Media Acquisition Corporation (NASDAQ:LMACA), with 3.2 million shares amounting to approximately $32.57 million.

Unlike Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Alphabet Inc. (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT), Liberty Media Acquisition Corporation (NASDAQ:LMACA) is one of the stocks David Tepper is selling.

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Disclosure: None. Billionaire David Tepper is Selling These 10 Stocks is originally published on Insider Monkey.