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Tepper Crushes China Trade: Here's Why He's Still Bullish
Who Is David Tepper?
David Tepper is a hedge fund manager and the portfolio manager of Appaloosa Management – an investment firm recognized for its specialization in distressed debt and stock investments. Tepper is renowned for his uncanny market sense, daring investment strategies, and high-conviction trades (which often proven correct).
Over the past few decades, Tepper has emerged as a power player in the finance arena. In addition to his many accomplishments, he holds ownership of the Carolina Panthers NFL team and Charlotte FC in Major League Soccer (MLS). Tepper is also famous for his charitable deeds and is ranked among the wealthiest hedge fund managers globally.
You don't become a multi-billionaire by doing the same thing as the crowd. David Tepper's greatest trade, and one of the greatest trades of all-time, was his buying of distressed assets after the Great Recession of 2008. Tepper finds success by:
· Buy blood is in the streets: Unlike most investors, Tepper finds opportunity in crisis. As panic was hitting Wall Street in 2009 and Lehman Brothers and Bear Stearns had collapsed, David Tepper bought massive positions in hypothetically risky banks like AIG.
· Leverage government intervention/ fiscal stimulus to your advantage: Tepper's reasoning for buying banking stocks was simple: The U.S. government promised to "shore up" the banking sector and provide liquidity.
· Buy companies with large cash piles and low valuations: Rather than chasing momentum, Tepper prefers to buy stocks poised to revert to the mean.
· High conviction: Because Tepper waits patiently for asymmetric opportunities, he is able to cash in, unlike most investors. As Jesse Livermore once said, "Those who can both be right and sit tight are uncommon."
Tepper Nails the China Trade
Last quarter, David Tepper's 13F disclosure showed that he was heavily bullish on China with positions in JD.com, Baidu, the iShares China LC ETF and the Krane CSI China Internet ETF. Tepper's largest position was Alibaba, which accounted for ~$750 million or 12.24% of his portfolio.
Analyzing Tepper's BABA Trade
With the stock beaten down, Tepper increased his BABA stake dramatically in Q1.
The trading legend was likely pricing in China stimulus (correctly). Early this week, the Chinese government announced a massive, larger-than-expected stimulus package to boost the ailing Chinese economy. In a CNBC interview Thursday, Tepper touted that Chinese stocks have single-digit P/E multiples and double-digit growth.
Tepper Chinese Outlook
Finally, in addition to bargain basement valuations and strong growth expectations, the billionaire investor says he continues to pile into Chinese stocks because they enjoy massive cash hoards.
Bottom Line
David Tepper is among the sharpest minds on Wall Street. The success of his recent bets on Chinese stocks is further evidence that investors should learn from his investing blueprint and listen closely when he speaks.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: JD.com, Baidu, FXI, KWEB and Alibaba
For Immediate Release
Chicago, IL – September 27, 2024 – Today, Zacks Investment Ideas feature highlights JD.com (JD - Free Report) , Baidu (BIDU - Free Report) , iShares China LC ETF (FXI - Free Report) , Krane CSI China Internet ETF (KWEB - Free Report) and Alibaba (BABA - Free Report) .
Tepper Crushes China Trade: Here's Why He's Still Bullish
Who Is David Tepper?
David Tepper is a hedge fund manager and the portfolio manager of Appaloosa Management – an investment firm recognized for its specialization in distressed debt and stock investments. Tepper is renowned for his uncanny market sense, daring investment strategies, and high-conviction trades (which often proven correct).
Over the past few decades, Tepper has emerged as a power player in the finance arena. In addition to his many accomplishments, he holds ownership of the Carolina Panthers NFL team and Charlotte FC in Major League Soccer (MLS). Tepper is also famous for his charitable deeds and is ranked among the wealthiest hedge fund managers globally.
Crisis = Opportunity. Tepper's $7 Billion Windfall
You don't become a multi-billionaire by doing the same thing as the crowd. David Tepper's greatest trade, and one of the greatest trades of all-time, was his buying of distressed assets after the Great Recession of 2008. Tepper finds success by:
· Buy blood is in the streets: Unlike most investors, Tepper finds opportunity in crisis. As panic was hitting Wall Street in 2009 and Lehman Brothers and Bear Stearns had collapsed, David Tepper bought massive positions in hypothetically risky banks like AIG.
· Leverage government intervention/ fiscal stimulus to your advantage: Tepper's reasoning for buying banking stocks was simple: The U.S. government promised to "shore up" the banking sector and provide liquidity.
· Buy companies with large cash piles and low valuations: Rather than chasing momentum, Tepper prefers to buy stocks poised to revert to the mean.
· High conviction: Because Tepper waits patiently for asymmetric opportunities, he is able to cash in, unlike most investors. As Jesse Livermore once said, "Those who can both be right and sit tight are uncommon."
Tepper Nails the China Trade
Last quarter, David Tepper's 13F disclosure showed that he was heavily bullish on China with positions in JD.com, Baidu, the iShares China LC ETF and the Krane CSI China Internet ETF. Tepper's largest position was Alibaba, which accounted for ~$750 million or 12.24% of his portfolio.
Analyzing Tepper's BABA Trade
With the stock beaten down, Tepper increased his BABA stake dramatically in Q1.
The trading legend was likely pricing in China stimulus (correctly). Early this week, the Chinese government announced a massive, larger-than-expected stimulus package to boost the ailing Chinese economy. In a CNBC interview Thursday, Tepper touted that Chinese stocks have single-digit P/E multiples and double-digit growth.
Tepper Chinese Outlook
Finally, in addition to bargain basement valuations and strong growth expectations, the billionaire investor says he continues to pile into Chinese stocks because they enjoy massive cash hoards.
Bottom Line
David Tepper is among the sharpest minds on Wall Street. The success of his recent bets on Chinese stocks is further evidence that investors should learn from his investing blueprint and listen closely when he speaks.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.