Outside of finance and sports ownership, Tepper’s career includes a series of formative positions that shaped his reputation and investment philosophy. After earning his economics degree, he worked as a credit analyst at Equibank in Pittsburgh before enrolling at Carnegie Mellon. Post-MBA, he joined Republic Steel’s treasury department in Ohio and then moved to Keystone Mutual Funds in Boston. In 1985, Goldman Sachs recruited him for its newly formed high-yield credit group in New York City. Tepper quickly rose to head trader within six months, playing a crucial role in the firm’s recovery after the 1987 stock market crash by purchasing bonds from weakened financial institutions. Known for his blunt market commentary, he advised against fear-driven investment decisions during economic turbulence, famously dismissing extreme market predictions and championing the adaptability of markets and people alike.
Appaloosa Management, founded by Tepper in early 1993 after leaving Goldman Sachs, has become synonymous with high-stakes investing in distressed companies and volatile markets. Based initially in Chatham, New Jersey, the firm was established as an employee-owned investment management company with a sharp focus on distressed debt. From its inception, Appaloosa Management has specialized in investing across public equity and fixed income markets on a global scale. The firm built a reputation for its bold, contrarian investment strategy, particularly in volatile and high-risk sectors.
Appaloosa Management quickly gained recognition, generating a 61% return in 2001 through distressed bond investments, and in 2005, pivoted to lucrative opportunities in S&P stocks. Tepper’s hedge fund became known for profiting from “dicier” companies, with notable gains from MCI, Mirant, Conseco, and Marconi. In 2009, Appaloosa made about $7 billion by purchasing distressed financial stocks like Bank of America at just $3 per share during the market crash, with $4 billion going directly to Tepper’s personal wealth, making him the top-earning hedge fund manager that year.
Throughout the 1990s, Appaloosa Management earned recognition as a niche junk bond investment boutique, distinguishing itself by targeting undervalued, distressed corporate debt that other investors tended to avoid. As the hedge fund industry evolved in the 2000s, so did Appaloosa’s role and reputation, becoming widely regarded as one of the premier hedge funds in the world, known for its aggressive, high-reward investment tactics. Its core strategy continued to focus on distressed securities, but it also expanded its portfolio to include opportunities in equities and other financial instruments, consistently generating strong returns through bold market bets.
As of its most recent 13F filing for the fourth quarter of 2024, Appaloosa Management’s top ten holdings account for 66.75% of this portfolio, which reflects the firm’s high-conviction, opportunistic investment strategy, a hallmark of David Tepper’s approach.
We searched through Appaloosa Management’s Q4 2024 13F filings to identify the top stocks in its portfolio. The resultant stocks are then compiled in the ascending order of the fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included hedge fund sentiment regarding each stock using data from 1009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
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).
An e-commerce platform displaying a wide range of products to customers online.
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese multinational technology conglomerate whose operations span e‑commerce, cloud computing, logistics, and digital services. Its core marketplaces, Taobao and Tmall, connect merchants, brands, and consumers across China and abroad. At the same time, Alibaba Cloud underpins its infrastructure offerings, Cainiao Network handles logistics and supply‑chain solutions, and Ele.me delivers food services, all of which together form a comprehensive ecosystem that supports the company’s merchants and end users.
For the quarter ended December 31, 2024, Alibaba Group Holding Limited (NYSE:BABA) delivered an 8% year‑over‑year revenue increase to RMB 280.15 billion ($38.38 billion). Operating income soared 83% to RMB 41.2 billion ($5.65 billion), due in part to reduced impairment of intangible assets and a 4% rise in adjusted EBITA to RMB 54.85 billion ($7.52 billion). Net income attributable to shareholders climbed an impressive 333% to RMB 48.95 billion ($6.71 billion), buoyed by strong operational performance and mark‑to‑market gains on equity investments. Earnings per ADS reached RMB 20.39 ($2.79), and non‑GAAP diluted EPS grew 13% to RMB 21.39 ($2.93). Alibaba Cloud also returned to double‑digit growth, with revenue up 13% year‑over‑year, driven by rapid expansion in AI‑related services.
Looking forward, Alibaba Group Holding Limited (NYSE:BABA) has committed at least RMB 380 billion ($52.4 billion) over the next three years to build out its AI and cloud infrastructure. Eddie Wu, CEO of Alibaba Group, outlined plans to invest heavily in foundational model platforms, AI‑native applications, and the AI transformation of existing businesses.
Founder Jack Ma, speaking at Alibaba Cloud’s fiscal‑year kickoff earlier in April, emphasized that AI should empower rather than replace humanity: “We are not trying to make machines like humans, but rather to enable machines to understand humans, think like humans, and do things that humans cannot do.” Reflecting on Alibaba Group Holding Limited (NYSE:BABA)’s 25‑year history, Ma reiterated the company’s mission to fill technological gaps — building payment services when none existed, investing in logistics, creating cloud infrastructure, and establishing credit systems — all to ensure that technology serves every ordinary person and drives sustainable, human‑centered innovation.
Overall, BABA ranks 1st on our list of billionaire David Tepper’s top stock picks. While we acknowledge the potential of these stock picks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. 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 BABA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.