We recently published a list of Billionaire David Tepper’s Top 10 Stock Picks Heading into 2025. In this article, we are going to take a look at where Oracle Corporation (NYSE:ORCL) stands against other Billionaire David Tepper’s top stock picks heading into 2025.
David Tepper is one investor who stands out in squeezing and generating optimum returns from distressed debt and undervalued equities. Born into a middle-class family, he has risen up the ranks to become one of the most successful investors on Wall Street. The billionaire investor started Appaloosa Management LP in 1993 after quitting his job at Goldman Sachs after being overlooked for promotion twice.
It is a decision the billionaire investor can never regret, as Appaloosa Management LP has grown to become one of the most followed hedge funds on Wall Street. It had one of its best performances in 2001 when it returned 61% on investing in distressed bonds after the dot com crash.
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Additionally, Appaloosa made $7 billion at the height of the great recession in 2009, when it opportunistically bought into distressed financial stocks and bonds. The focus on distressed situations has always defined Tepper. The investment strategy has allowed Tepper to accrue significant wealth, based on his net worth of about $21 billion. His hedge fund has made billions of dollars over the years, averaging 28% returns annually.
Tepper is already sensing a window of opportunity with Chinese equities trading at highly discounted valuations in response to deteriorating economic conditions. In the aftermath of the Chinese government initiating a series of stimulus packages to try and prop up the economy, Tepper believes it is time to take a closer look at Chinese equities.
“Everything,” Tepper said when asked what Chinese stocks to buy in an interview with CNBC. “Everything… ETFs, I would do futures, everything.” The investment thesis is based on the notion that it is wrong to fight the Fed, which in this case is the Chinese government and the central bank.
Tepper’s sentiment comes on China cutting key interest rates and announcing liquidity support for the stock market. China’s central bank has lowered bank reserve requirements and encouraged companies to buy back stocks. Appaloosa Management has already responded to China’s monetary policy changes by tweaking its portfolio. The hedge fund trimmed stakes in some of the big US tech companies whose valuations have exploded over the past year amid the artificial intelligence-driven rides. In return, it has ramped up stakes in Chinese internet giants.
“I don’t love the US markets on a value standpoint, but I sure as heck won’t be short, because I’d be nervous as heck of the setup with easing money everywhere, a relatively good economy, and China just doing massive stimulus coming in, so it would make me nervous not to be somewhat long the US,” Tepper said.
Amid the sentiments, technology stocks both in the US and China account for the most significant share of billionaire David Tepper’s top 10 stock picks. Additionally, the billionaire investor is heavily invested in the services sector and basic materials as part of his diversification strategy.
Our Methodology
To compile billionaire David Tepper’s top 10 stock picks heading into 2025, we scanned Appaloosa Management LP’s Q3 ’2024 portfolio. We identified the top ten stocks from the hedge fund’s portfolio. Then, we ranked these stocks in ascending order according to the size of the hedge fund’s investments in them.
At Insider Monkey, we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Oracle Corporation (NYSE:ORCL)
Appaloosa Management LP’s Stake Value: $268.11 Million
Number of Hedge Fund Holders: 91
Oracle Corporation (NYSE:ORCL) is a technology company that offers products and services that address enterprise information environments. As cloud computing has emerged as the foundation of the digital revolution, ORCL has emerged as a significant player in the burgeoning sector. The company boasts a client base that includes Fortune 500 companies, governments, and leading database enterprise companies.
Likewise, Oracle Corporation (NYSE:ORCL) is one of the biggest beneficiaries of the artificial intelligence-driven demand for cloud services. Its cloud services growth, AI vision and a shift of database businesses to the cloud affirm why it is one of Billionaire David Tepper’s top 10 stock picks. Its growth metrics and long-term prospects are solid, especially on signing agreements with big three cloud providers Amazon, Microsoft and Alphabet’s Google.
Agreements with tech giants open the way for Oracle Corporation (NYSE:ORCL) to introduce its services to new customers, strengthening its revenue base. Additionally, the company is expanding and strengthening its business on the international scene. It has partnered with Japan’s NTT Data to expand its cloud capabilities. Its cloud infrastructure is to be integrated into the US Army’s Integrated Personnel and Pay System-Army. The strategic partnerships should positively impact Oracle’s growth metrics, allowing it to generate significant shareholder value.
Madison Sustainable Equity Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q3 2024 investor letter:
“The top contributors in the quarter were NextEra Energy, Oracle Corporation (NYSE:ORCL), Progressive Corporation, Equifax Inc., and United Healthcare. Oracle reported a strong first quarter with accelerating Cloud infrastructure demand. Oracle followed its solid first quarter with an upbeat analyst meeting which highlighted multi-year growth opportunities for the company.”
Overall, ORCL ranks 8th on our list of Billionaire David Tepper’s top stock picks heading into 2025. While we acknowledge the potential of ORCL, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ORCL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.