David Tepper Offloads Intel, Slashes UnitedHealth Stake in Q3 to Buy This Lesser-Known Stock

David Tepper is the founder of Appaloosa Management, one of the most successful hedge funds in the world. The investor, with a net worth of over £17.2 billion ($23 billion), is also the owner of the NFL's Carolina Panthers and Charlotte FC in Major League Soccer.

He is credited with playing a significant role in the survival of Goldman Sachs after the 1987 stock market crash. Tepper left Goldman Sachs in 1992 and established Appaloosa in 1993, which has achieved annualised returns of around 25% since inception.

Tepper is also known for his strategy of investing in distressed companies with debt-laden balance sheets. This approach paid off notably during the Global Financial Crisis, when he earned approximately $7 billion (£5.2 billion) during a full-blown recession.

Exiting Intel Position

In Q3, Tepper sold his entire stake in Intel (Nasdaq: INTC), worth over $200 million (£150 million), despite the chipmaker's stock surging on government backing and a partnership with Nvidia (Nasdaq: NVDA).

Industry experts had expressed concerns about Intel's failure to capitalise fully on the AI boom. The stock had faced prolonged pressure until securing a US government contract and investments from SoftBank earlier this year, which contributed to a record rally. Additionally, a $5 billion (£3.7 billion) partnership with Nvidia supported that rally. However, analysts have argued that Intel remains 'fundamentally challenged', and the recent rally might not be sustainable. This outlook aligns with Tepper's decision to exit his position, likely to lock in profits after the stock's surge.

Overall, Tepper probably sold his entire Intel stake to realise gains as the stock price increased. Most analysts believe Intel will struggle to fully recover within this decade.

Slashing Stake in UnitedHealth Group

Tepper's Appaloosa sold 2.25 million shares of UnitedHealth Group (NYSE: UNH), worth approximately $780 million (£585.2 million), reducing his stake by 91.6%. This was the biggest sale for the hedge fund in Q3.

UnitedHealth's stock, which is the largest health insurer in America, became a favourite among hedge funds after halving in value, making it available at a 50% discount. Tepper initially increased his position in Q2, then sold in the following quarter. It's not clear when he purchased the stock during Q2. If he bought at the peak, he might be cutting his losses; if he purchased during the dip, the slow recovery in share price could be too gradual for his investment strategy.

Increasing Whirlpool Holdings

In Q3, Tepper increased his stake in Whirlpool (NYSE: WHR) by 1,966%, or 5.23 million shares, worth over $400 million (£300 million). Whirlpool manufactures home appliances.

Since its peak in mid-2021, the stock has declined nearly 70%, affected by the post-pandemic housing bust. The company's total debt exceeds $8 billion (£6 billion), while its market capitalisation is just over $4.3 billion (£3.2 billion). This makes Tepper's move a classic example of investing in distressed assets. He likely sees potential for recovery, expecting that retailers will increase purchases of Whirlpool products once tariffs in China are fully implemented and rate cuts encourage more homebuilding.

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