Billionaire David Tepper Loaded Up These 3 FANG Stocks

Discussion in 'Wall St. News' started by dealmaker, Dec 10, 2019.

  1. dealmaker

    dealmaker

    Billionaire David Tepper Loaded Up These 3 FANG Stocks; Should You?
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    TipRanks
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    TipRanksDecember 10, 2019


    Wall Street pays attention when David Tepper makes an investment move. Tepper started out his career as a credit analyst with Goldman Sachs in the 1980s, diving right away into risky bonds and other distressed debt assets. Older financial hands noticed that Tepper was right more than he was wrong with this gutsy strategy, and brought in high returns for the firm.

    Tepper earned a reputation as a go-getter who was not afraid to take hair-raising chances. When he parted ways with Goldman Sachs in 1992, he took that attitude with him when hefounded Appaloosa Management the next year.

    Starting with $57 million in available capital, Tepper has since built Appaloosa into a behemoth – the fund now has over $17 billion in assets under management. With Appaloosa, Tepper has maintained his preference for high-risk, high-yield distressed debt investments, but among the firm’s assets are $3.4 billion in 13F securities. And the list of stocks that Tepper’s fund has bought into is most interesting.

    Even though Tepper’s reputation was built on taking risks, Appaloosa’s three biggest investments, comprising 44% of the holdings in the Q3 13F filing, were Alphabet, Facebook, and Amazon – three of the four FANG stocks. Collectively, these companies hold the third, fourth, and fifth spots among the largest publicly traded companies in the world, and none of them are considered “high-risk.” Tepper has put over $1.5 billion dollars into these three companies – with large increases in his holdings of them in Q3.

    Remember, of course, that Tepper still must ensure that investors receive the returns they were sold on. The FANG stocks, all giants in the high-return tech sector, are one way of doing just that.


    Amazon (AMZN)

    Amazon is the world’s third largest publicly traded company, with a market cap of $872 billion, and has absolutely dominated online retail since the 2000s. The company is a known innovator in warehousing techniques and processes, and has developed a ruthless reputation for improving cost efficiencies.

    Large capital expenditures in the past year depressed EPS according to the most recent quarterly earnings report. The key metric was down by 9%, at $4.23 against the $4.62 estimate, even though top-line revenues gained 24% and reached $70 billion for the quarter. The company has spent over $1.6 billion in 2019 on promoting and expanding its one-day delivery. Even though management acknowledged that the capex pushed down earnings, they also announced a further $1.5 billion spend in Q4, on expansions of the warehouse network and product lines. Not many companies can react to a bottom line hit from high capex by announcing even higher future capex. Amazon gets away with it due to its size, its economies of scale, and its strong cash flows.

    Tepper bought up 80,000 shares of AMZN in Q3, an increase of 44% in his stake in the company. Appaloosa’s holding of AMZN shares is now 265,000 and is worth over $460 million at current prices.


    click here)">Squali puts a $2,350 price target on the stock, showing his confidence in an impressive 34% upside potential for the stock. (To watch Squali’s track record, click here)

    See Amazon's stock analysis on TipRanks)">Let’s face it, Wall Street agrees with him on this. AMZN shares have a single Hold rating, but a whopping 38 Buys – giving the stock a Strong Buy consensus rating. Amazon shares are famously expensive, at $1,761, and the average price target of $2,151 shows that Wall Street anticipates 22% upside growth. (See Amazon's stock analysis on TipRanks)

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    Facebook (FB)

    We’ve all heard the ugly details of Facebook’s recent troubles. User privacy breaches, a $5 billion FCC fine, accusations of political censorship, and Mark Zuckerberg’s bungled efforts at PR damage control all took a toll on the stock. And so, despite hitting an all-time high share price back in July of 2018 and giving the impression that the sky was the limit, the company fell hard and fast through 2H18 and has had difficulty regaining traction in 2019.

    A look at the price chart shows that FB’s troubles may be in the rearview mirror as the stock has been rising through the fourth quarter of this year. Revenues and earnings both beat the forecasts in Q3, with the top line at $17.65 billion and EPS at $2.12. Usage metrics across the company’s apps remain high, with Monthly Average Users meeting expectations at 2.45 billion and Daily Active Users edging over the estimates at 1.62 billion.

    The sheer size of those numbers opens a window to Facebook’s underlying strength, and the reason the social media giant was able to weather its recent storms: the company is simply huge. With 2.45 billion monthly active users, Facebook is reaching up to one-third of the world’s total population – and a higher proportion of those with internet access. Advertisers will pay handsomely for that kind of reach, and Facebook shares show the result: the stock is up 54% in 2019, more than double the S&P 500’s year-to-date gain.

    Tepper was impressed enough with Facebook to boost his fund’s holding by 53%. Appaloosa added 975,000 shares of FB to its portfolio in Q3, bringing the total holding to 2.825 million. That’s worth over $503 million today, and makes up 15.9% of Appaloosa’s total 13F portfolio.


    click here)">Along with the Outperform rating, Josey’s $250 price target implies a steady upside of 24% to the stock. (To watch Josey’s track record, click here)


    click here)">Olsen sees continued regulatory issues as a source of risk, but believes the company has the resources to meet the challenge. He puts a Buy rating on the stock, and his $230 price target indicates room for 14% growth on the upside. (To watch Olsen’s track record, click here)

    See Facebook stock analysis on TipRanks)">Overall, FB shares have a Strong Buy consensus rating, based on an impressive 30 Buy ratings given in the past three months. There are still 2 Holds and 2 Sells on the stock, left over from the company’s difficulties. The average price target, $234.70, suggests an upside of 17% from the current share price. (See Facebook stock analysis on TipRanks)

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    Alphabet (GOOG)

    GOOG looks like a compelling investment. The stock has outperformed the S&P 500 this year, up 31%. Shares have dipped slightly at the end of October, after the company missed the earnings forecast by 19%. EPS was reported at $10.12 against an estimate of $12.42. Revenues were strong, at $40.5 billion beating the estimate by a half-percent, and the stock has since recouped its loss and then some.

    Tepper has bought up 229,900 Class C GOOG shares in Q3. Clearly, he’s not interested in controlling the company but is simply seeking a steady return. His purchase of GOOG more than doubled his stake in Alphabet, making the total holding 444,900 shares currently valued at $542 million.

    click here[/a])

    click here)">Michael Olsen, quoted above on FB, was impressed with GOOG shares. He initiates coverage of the stock for Piper Jaffray with a Buy rating and another $1,500 price target. In his initiation note, he points out, “While there's no question that the company will face ongoing regulatory scrutiny, which could lead to some headline risk, the investor community has, to some degree, become numb to this and we believe the positives of the underlying business will outweigh negative news flow.” (To watch Olsen’s track record, click here)

    See Alphabet's stock analysis on TipRanks)">With 32 "buy" ratings against just 3 "holds," GOOGL shares have earned their Strong Buy consensus rating. The stock is not cheap, selling for a hefty $1,353, and the average price target of $1466 implies that there is room for 8% upside growth. (See Alphabet's stock analysis on TipRanks)

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    https://finance.yahoo.com/news/billionaire-david-tepper-loaded-3-154921862.html
     
    ETJ likes this.
  2. S2007S

    S2007S

    Guess he believes all three of these stocks will be returning double digit returns once again. Imagine if these 3 stocks drop for 2020. That would be the most heartbreaking moment for wallstreet.
     
  3. Something is wrong with AMZN. Lots of dumping
     
    lovethetrade likes this.
  4. Overnight

    Overnight

    They stopped selling magnetic whale art.
     
    vanzandt likes this.
  5. S2007S

    S2007S

    Once amazon goes so goes the market unless fb or apple or google or microsoft can gain 30-50% for the year to sustain amazons losses. Competition is really getting tough for amazon these last 2 years, and AWS is really the only thing that has propelled amazons earnings the last 4-5 years. Without AWS amzn would be sitting under $1000. I guess many are still hoping the same dozen stocks are the ones that keep gaining because most of this rally has only been because of them. Strip them out and you have a flat to down market.
     
  6. lovethetrade

    lovethetrade Guest

    Last edited by a moderator: Dec 11, 2019
    vanzandt likes this.
  7. maxinger

    maxinger

    and some other Billionaires unloading these 3 FANG Stocks.

    because quantity seller = quantity buyer.

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  8. lovethetrade

    lovethetrade Guest

    There's not much exciting new tech atm. Most sales have been refurbished. I think retail might get hit hard this Christmas.

    Not sure how you could be long this stock at those levels. Amazon's been indulging in monopolistic behavior—squeezing customers for every cent and delaying shipping unless you're a Prime member or pay additional. They built the business on good faith (i.e. doing everything in the best interests of the customer) so will be interesting to see how this new approach pans out for them. It's definitely new territory for them.
     
    Last edited by a moderator: Dec 12, 2019
  9. lovethetrade

    lovethetrade Guest

    I also think Facebook's business model has been poorly executed. Fortunately for them their network effect is unbreakable otherwise they would've been disrupted by now.

    Alphabet is probably the best out of those 3. Their cloud platform is the best and will be the likely winner in that segment.
     
    vanzandt likes this.
  10. dealmaker

    dealmaker

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    #10     Aug 15, 2020