Why David Tepper Increased Technology Stock Positions in 2Q17
David Tepper’s interview with CNBC
In a recent interview with CNBC, David Tepper, a prominent player in the hedge fund industry, discussed his recent buying and selling activity, his interest in technology stocks, and his stance on the equity (SPY) and bond (BND) market.
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Tepper on the technology sector
David Tepper is the founder of Appaloosa Management. According to a recent 13F filing, his firm increased its position in the information technology sector (XLK) in 2Q17. The technology sector represents nearly 35.9% of the firm’s portfolio in 2Q17 as compared to 20.2% in 1Q17. The technology sector is the largest sector in the firm’s portfolio.
Tepper said in the interview that technology stocks’ “multiples are still low, they just look cheaper than any other part of the market even though they moved.” Facebook (FB), Apple (AAPL), Alphabet (GOOGL), and Microsoft (MSFT) returned nearly 42.8%, 35.6%, 14.8%, and 15.8%, respectively, on a year-to-date basis as of August 18, 2017. These stocks are trading at trailing price-to-earnings multiples of 36.36x, 17.92x, 33.53x, and 26.78x, respectively. David Tepper thinks even though these stocks moved up very high, their multiples are still low compared to their business model. The Technology Select Sector SPDR Fund (XLK), which tracks the performance of the information technology sector, rose nearly 17% on a year-to-date basis.
In the next part of this series, we’ll analyze David Tepper’s top buys in 2Q17.