Billionaires march to the beat of their own drums. As a case in point, just look at the recent trades made by Warren Buffett and David Tepper.
Buffett didn't initiate any new positions for Berkshire Hathaway in the fourth quarter of 2023. He added to only three of Berkshire's existing holdings.
Tepper, on the other hand, bought a whopping 16 stocks for his Appaloosa Management hedge fund -- including nine new positions. Here are all of the stocks the billionaire hedge fund manager bought, along with the ones I think are the best of the bunch.
Adding to his stake
Like many investors, Tepper has ridden the artificial intelligence (AI) wave in a big way. He continued to do so in Q4, buying additional shares of three AI stocks.
Microsoft ranked as Appaloosa's second-largest holding at the end of Q4. Amazon (AMZN +2.46%) trailed not too far behind at No. 3. Tepper increased his hedge fund's stake in both stocks during Q4. He also scooped up additional shares of Chinese tech stock Alibaba Group Holding, which is investing heavily in AI.
NASDAQ: AMZN
Key Data Points
The billionaire investor decided to increase Appaloosa's positions in a couple of energy stocks during Q4. Tepper bumped up his hedge fund's stake in Antero Resources a bit. He also significantly expanded his holdings of midstream energy company MPLX (MPLX -1.13%).
What happens in Vegas doesn't always stay in Vegas. Tepper bought more shares of casino and hotel operator Caesars Entertainment in Q4, as well.
Newly initiated positions
Tepper found plenty of new stocks that he liked in the fourth quarter. Only one of them has a connection with AI, though. Oracle achieved success with its relational database management system but is now a big player in cloud infrastructure and AI. Tepper initiated a new position in the stock, buying nearly 1.33 million shares.
The hedge fund CEO was even more bullish about manufacturing stocks. In Q4, Tepper added positions in chemical manufacturer FMC, appliance manufacturer Whirlpool, flooring manufacturer Mohawk Industries, auto manufacturer General Motors (GM +1.49%), home improvement and home construction products manufacturer Masco, and insulation, roofing, and fiberglass products manufacturer Owens Corning.
NYSE: GM
Key Data Points
Tepper also opened up new positions during Q4 in shipping and logistics giant United Parcel Service and railroad company Norfolk Southern. He delved into the healthcare sector, as well, initiating a stake in hospital operator HCA Healthcare.
Best of the bunch
Which of Tepper's purchases in Q4 are the best of the bunch? I think the answer depends on your investing style.
Income investors will no doubt like MPLX's ultra-high distribution yield of over 8.7%. The midstream energy company is delivering surprisingly strong earnings growth. I expect that MPLX will continue to grow its distribution and cash flow over the next few years.
NYSE: MPLX
Key Data Points
Value investors won't find many stocks cheaper than General Motors. The automaker sports a super-low forward earnings multiple of only 4.3x.
Importantly, GM has led the industry in combined pickup, full-size van, and full-size SUV sales (the most lucrative market segments) for 10 years in a row. It also topped the industry in initial quality, based on J.D. Power's ratings for the second consecutive year.
Which Tepper pick is the best choice for growth investors? This is a harder decision. I like the prospects for Amazon, Microsoft, and Oracle, thanks to AI tailwinds for all three companies. Long-term investors will probably reap solid gains with any of these stocks.
If I had to pick just one of them, though, I'd go with Amazon. I think the company has tremendous opportunities with its Amazon Web Services (AWS) cloud unit. I also like the company's booming advertising business.
