Before owning the NFL’s Carolina Panthers and MLS’s Charlotte FC, David Tepper made a name for himself (and money) through Appaloosa Management, a global hedge fund he founded. Tepper, whose net worth is around $20 billion, is among the world’s 100 richest people. Needless to say, he found success in the world of investing.
Given Tepper’s success, it makes sense that investors would look to his and his hedge fund’s investments for guidance. Even though the average investor and billionaire hedge fund managers don’t have the same risk tolerance or investment goals, there’s nothing wrong with taking inspiration from them.
Tepper’s portfolio is quite concentrated, with almost a third held in three “Magnificent Seven” stocks. If investors want strong, sustainable companies for the long term, they need look no further.
1. Amazon
Amazon (NASDAQ:AMZN) became a household name due to its e-commerce businessbut it has since diversified and become a major player in a handful of industries.
For a while, Amazon’s e-commerce business was unprofitable and was used primarily as a revenue generator. It’s still Amazon’s largest source of revenue, but it has recently become profitable. In the fourth quarter, Amazon’s North American segment earned about $6.5 billion in operating profits, an impressive turnaround from the $240 million it lost in the fourth quarter of 2022. Its international segment lost $419 million. of dollars, which isn’t ideal, but it leaves Amazon profitable in the fourth quarter. its non-Amazon Web Services (AWS) activities.
There’s still room for growth in e-commerce, but much of Amazon’s growth will rely on its cloud service, AWS. Although AWS’s growth has slowed recently, 13% year-over-year growth isn’t too bad for Amazon’s biggest profit producer. AWS has a significant market share in global cloud services, but has lost some ground over the past year. However, its market share is 31%, which places it in the lead MicrosoftIt is (NASDAQ:MSFT) Azure (a 24% share) and Alphabet’s Google Cloud (11%).
In the long term, Amazon is expected to benefit from organic growth in cloud services and e-commerce. However, the company has also shown that it is willing to invest in new industries. Take for example its $13.7 billion purchase of Whole Foods and its healthcare ambitions. Investors can count on the company not to be complacent.
2.Microsoft
There are various tech companies, and then there’s Microsoft, the poster child for a broad network of companies.
Microsoft did not become the most valuable public company in the world by chance; it took years of impressive business growth and a boost from the AI craze. The latter could also support the company in its next phases of growth.
Microsoft’s strategic partnership with OpenAI – which gives it exclusive licenses to OpenAI’s Large Language Models (LLMs) – could be just what it needs to further strengthen its grip on office software. From Office (Excel, Word, PowerPoint, etc.) to Azure via Teams,…
