Insider Monkey

Billionaire David Tepper’s 2023 Portfolio: Top 15 Stock Picks

Ramish Cheema
8 min read

In This Article:

In this piece, we will take a look at the top 15 stock picks in billionaire David Tepper's 2023 portfolio. For more stocks, head on over to Billionaire David Tepper's 2023 Portfolio: Top 15 Stock Picks.

After a tumultuous 2022 and a start to 2023 that saw markets focus on whether the Federal Reserve would finally end its interest rate hiking cycle and if this would cause a recession, over the past couple of months a new complication has made its way into the financial markets. This is the U.S. debt ceiling, and it sits right at the heart of the American economy and by extension, the global economy. The debt ceiling is decided by Congress, and it serves as a check for the executive branch - or the Treasury Department under the President - to limit the amount of money that it can borrow to meet debt repayments.

The back and forth between the president and Congress for this ceiling has often created turmoil in the financial market. In fact, this tussle also caused S&P Global Ratings to downgrade U.S. government debt to AA+ from AAA in 2011 - the first and only time in history that America received a downgrade which is often reserved for developing countries with fiscal mismanagement. The impact of this downgrade on the stock markets was immediate, with all major indexes declining by as much as seven percent in the aftermath.

So, what would happen to the economy if America were to default? Well, the government borrows money to fund a variety of programs and functions such as salaries and healthcare spending. This funnels money into the economy and stimulates productivity for a variety of businesses. In case of a default, this spending stops and a large amount of money is removed from the economy. How large? According to the investment bank Goldman Sachs, the event can cut up to ten percent of the American economy until the government figures out how to raise money. Perhaps ironically, a default also increases the risk premium that investors lending to the U.S. government demand for their money, which then spirals into higher costs of borrowing for the consumer (for instance for mortgages) and more interest payments that the government has to make on its debt. In broader terms, a Democratic Party think tank estimates that the economy can lose as many as three million jobs and a 30 year mortgage could cost an additional $130,000 to fund.

In this turmoil, how does one invest? Well, it's important to look at what hedge funds are doing especially since talk of the debt ceiling had started to emerge since January. Fortunately for us, hedge fund filings for the first quarter of this year have started to become available and one fund that is on our radar is billionaire David Tepper's Appaloosa Management. Mr. Tepper is one of the richest people in the world, with Forbes Magazine estimating his net worth at $18.5 billion as of May 2023. He set up the hedge fund in 1993 and since then it has grown to manage billions of dollars in funds, with our research suggesting a portfolio value of $1.8 billion as of Q1 2023. The billionaire has a business school named after him, and he started his career working in a steel company. Mr. Tepper's astute management at Goldman Sachs during the 1987 Black Monday stock market crash earned him laurels in the industry, as he bought debt that had dropped in value at the time but then recuperated the losses after the market recovered - resulting in gains for the investment bank.

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