“Don’t go it alone.” — Hebrew expression from the Torah
Those of you reading this have already taken the initiative to learn more about investing. And most of you are even managing some portion of your accounts.
That alone suggests you understand the above quote.
I urge you: Don’t stop there. It’s important that you continue to surround yourself with those who are in-the-know as you invest.
One of the greatest sources I know is the “smart money.” The money managers who generate big returns each year. Lucky for us, we can see how they’re doing it.
The Securities and Exchange Commission requires investment managers who oversee more than $100 million to file a Form 13-F. They report the positions they hold on this form each quarter.
This includes investment advisers who manage money. It also includes banks, insurance companies and stockbrokers. Corporations and pension funds that manage their own portfolios qualify as well.
I follow these reports closely.
I call these managers “gurus.” They are a source of many of my investment ideas. I’m even in the process of creating a service that follows their ideas.
I want to share more about one of them with you…
The Smart Money
David Tepper left Goldman Sachs to found the Appaloosa Management hedge fund 25 years ago. He still runs it today.
Tepper knows how to find value. I believe his keen eye will lead us to at least 25% profits in one name. But first, I want to provide some background for you…
Tepper’s Foresight Is Amazing
In 2009, Appaloosa earned about $7 billion buying distressed financial stocks just before they bottomed.
Tepper reportedly pocketed $4 billion of that.
He bought megabank Bank of America Corp. (NYSE: BAC) for $3 a share. It is about $30 today.
He also kicked off the eponymous event known as the “Tepper Rally” while he was on CNBC in September 2010.
Tepper told the CNBC anchors that the Federal Reserve’s recent statement was a “put” for the market. The Fed’s words suggested it would support the capital markets.
I saw him live on TV that day. The S&P 500 Index was up more than 2% by the close. Then it did this:
The stock market jumped nearly 20% over the next five months.
That’s an amazing move in such a short time. Despite the heady market we’ve seen over the past few years, the S&P 500 has only moved up that fast 2% of the time since. And it hasn’t happened at all since 2013.
It’s ironic, too. Tepper was once known only as a bond guy. Most of his investing was on the credit side.
He famously told CNBC that day: “What, I’m going to say: ‘No Fed, I disagree with you, I don’t want to be long equities’? … We’re a bond place, but we changed up to a little bit more equities recently.”
We should all try to follow him in that respect. When the facts change, strive to change your minds.
Today, Forbes says his net worth is more than $11 billion.
We want to invest alongside this guru.
What to Do | Altaba
In the fourth quarter of last year, Tepper increased his position in closed-end fund Altaba Inc. (Nasdaq: AABA) by 89% to almost 8.9 million shares.
Altaba is what’s left over of Yahoo.
Last year, telecom giant Verizon bought Yahoo’s operating assets. But it didn’t buy Yahoo’s big stakes in Chinese tech giant Alibaba Group Holding Ltd. (NYSE: BABA) and Tokyo-traded Yahoo Japan. They became the main assets of Altaba.
Today, those assets alone are worth about $80 billion.
Altaba has just over 800 million shares outstanding, so its stake in these two assets is worth more than $95 per share. Altaba trades close to $70 today.
That’s a big discount. You can see why Tepper is interested.
It helps that more than 380 million Alibaba shares Altaba owns have doubled since the start of 2017. Bloomberg analysts have an average $226 one-year price target on BABA shares. It trades for around $180 today.
I suggest you look into shares of Altaba today.
Good investing,
Brian Christopher
Senior Analyst, Banyan Hill Publishing
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