The S&P 500 has returned 12.29% over the past 12 months as of May 2, 2025. In the same period, hedge fund manager David Tepper and his team at Appaloosa Management LP managed to return 26.29%. The performance gap widens dramatically when you stretch to three years—Appaloosa’s return in that period is 84.79% against the S&P 500’s 11.02%.
Billionaire David Alan Tepper has always been an interesting character. Some, especially those who support the Carolina Panthers, see him as a villain. But National Football League (NFL) owners are often heavily scrutinized and critiqued. Panthers fans may not endorse the billionaire’s decision-making, but his net worth ($21.3 billion as of May 2025) clearly shows that he makes better investment decisions than most investors. And he’s done this for a long time because Appaloosa has posted an average annual return of more than 25% since it was founded 32 years ago.
But even within investment circles, Tepper may sometimes come across as unconventional. When Appaloosa’s 13F filing for Q4 2024 became public, it made for an interesting reading. Tepper had spent the quarter going all in on Chinese stocks. He raised his stake in several Chinese tech stocks to such a point that one of the companies accounts for about 16% of the hedge fund’s holdings.
The interesting – and perhaps unconventional – bit in Tepper’s bets is that they happened when a tariff war was (and still is) brewing between the US and China. When asked to comment on this reality, Tepper said: “I don’t care. You know I’m sitting here in a suit. My counter bet is I don’t care.” In other words, the billionaire hedge fund manager doesn’t care about tariffs.
But should he? Analysis shows that Trump’s tariffs impacted the tech stocks in the US as well as in China. For instance, Trump’s escalation of tariffs on Chinese imports to 145% by April 2025 led to a sharp initial drop in tech indexes in both countries. The S&P 500 Information Technology Index dropped by 9.76%, and the CSI Overseas China Internet Index pared by 18.94%. Between April 3 and May 2, 2025, the US tech index increased by 10.84%. In the same period, the Chinese tech index declined by 2.55%. One can therefore, conclude that the tariffs are hurting Chinese tech stocks more than US tech stocks.
This perspective is critical because, as noted earlier, Tepper’s equities portfolio is dominated by US and Chinese tech stocks. One Chinese tech giant accounts for about 16% of the portfolio. To an investor without the billionaire hedge fund manager’s experience and shrewdness, this reality is concerning.
But this particular scenario is what defines Tepper: he takes risks, which, judging by Appaloosa’s return profile, often pay off.
Our Methodology
We reviewed Appaloosa Management LP’s SEC Q4 2024 13F filings to pick stocks for this list. Our focus excluded non-equity holdings such as options and ETFs. From the result, we obtained the average 12-month analyst price target for each stock as of May 5, 2025. We then focused only on stocks with an upside potential of at least 30% and then picked the top 10. This list is in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Why Caesars Entertainment, Inc. (CZR) Went Up On Friday
A general view of a luxury resort casino, surrounded by a beautiful landscape and illuminated at night.
Caesars Entertainment, Inc. (NASDAQ:CZR) is a gaming and hospitality company. It operates gaming properties under the Caesars, Harrah's, Horseshoe, and Eldorado brand names. The company mainly serves leisure and entertainment seekers primarily in the United States through destinations such as Las Vegas, Atlantic City, and regional markets.
On April 29, 2025, Caesars Entertainment, Inc. (NASDAQ:CZR) reported Q1 2025 earnings that fell short of Wall Street expectations. Normalized EPS was -$0.48 compared to -$0.44 year over year, missing consensus estimates by $0.30. Despite the earnings miss, the company's revenue slightly exceeded expectations at $2.79 billion versus the projected $2.74 billion. Same-store adjusted EBITDA grew 4% over the prior year to $884 million, driven primarily by significant gains in its Digital segment. The company is undertaking a major property transformation. Caesars Entertainment, Inc. (NASDAQ:CZR) is renovating Harveys Lake Tahoe into Caesars Republic Lake Tahoe with a $160 million transformation this summer. The 1.6 million-square-foot resort will be fully upgraded. The company also expanded its digital strategy, adding pari-mutuel horse race wagering to its Sportsbook app in Kentucky and Colorado, providing a seamless betting experience ahead of the Kentucky Derby.
On April 30, 2025, CFRA analyst Zachary Warring downgraded Caesars Entertainment, Inc. (NASDAQ:CZR) stock from Buy to Hold. Warring also established a new price target of $30.00, down from the previous $39.00. The analyst noted that the “broader challenging macroeconomic environment and the company’s balance sheet issues” are the major reasons for the downgrade.
Overall CZR ranks 2nd on our list of billionaire David Tepper's stock picks with huge upside potential. While we acknowledge the potential of CZR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than CZR but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
