In the midst of inflation reports and Federal Reserve decisions, a crucial data release flew under the radar six weeks ago. On August 14, institutional investors with over $100 million in assets under management filed Form 13F with the Securities and Exchange Commission, offering a glimpse into the investment strategies of Wall Street’s top money managers. One notable investor, David Tepper, founder of Appaloosa Management, made headlines by drastically reducing his stake in artificial intelligence leader Nvidia.
Tepper’s fund, which boasts an impressive 28% annualized return over the past 30 years, sold 84% of its Nvidia shares during the second quarter. This move may be attributed to the potential AI bubble, as investors have historically overestimated the adoption and utility of new technologies. Additionally, increasing competition in the AI arena, insider selling, and Nvidia’s premium valuation may have contributed to Tepper’s decision.
On the other hand, Tepper’s Appaloosa increased its stake in China’s second-largest e-commerce company, JD.com, by 18%. This move is intriguing, given JD.com’s historically low valuation and numerous long-term catalysts. China’s economy is expected to grow at a faster pace than developed countries, and the expansion of e-commerce to its middle class presents a significant growth opportunity. JD.com’s business model, which involves controlling inventory and logistics, may also lead to superior margins compared to its competitor Alibaba.
With a cash-rich balance sheet and a market cap of $41 billion, JD.com is trading at a mere 6.5 times consensus earnings per share for 2025. This undervalued gem has caught the attention of Tepper, and investors may want to take note of this opportunity.
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