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The Morning Brief: David Tepper Says Stocks Not Overvalued

The Appaloosa Management told CNBC that comparisons to 1999 are “ridiculous” and that the market is “nowhere near” overheated.

Appaloosa Management’s David Tepper gave the surging stock market a vote of confidence. In a telephone interview Tuesday on CNBC the eclectic investor said stocks are far from overvalued despite their strong double-digit runup this year. “Any comparisons to past overheated markets are ridiculous,” he told CNBC’s audience. “Look at where multiples and rates were in 1999. I’m not saying stocks are screaming cheap, but you’re nowhere near an overheated market.” He said strong global growth will boost earnings growth, adding “stocks are relatively cheap to interest rates.” He conceded rising interest could be a game-changer, but not until they increase substantially.

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Shares of Snap, the parent of social media app Snapchat, are up 7.7 percent — to $12.74 — over the past two days following the regulatory disclosures of hedge funds’ second-quarter U.S. stock holdings. Investors apparently are excited about the individuals who owned the shares and increased their holdings as of the reporting period. For example, Stephen Mandel Jr.’s Lone Pine Capital roughly quadrupled its stake to 7.6 million shares, while Balyasny Asset Management initiated a stake of 3 million shares. Keep in mind that on June 30, the last day of the reporting period, the stock closed at $17.77, above its $17 IPO price. So, even with the two-day run-up, the stock is still off more than 28 percent since then. So, we don’t know whether any of the holders finally threw in the towel on the stock after the end of the quarter, while others may have bottom-fished over the past few weeks.

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Seth Klarman’s Baupost Group boosted its U.S. equity portfolio to $8.75 billion as of the end of June, up slightly from 48.5 billion the previous quarter. As recently as September 30, it had $7 billion in U.S. assets.

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King Street Capital boosted its stake in energy giant The Williams Companies by 81 percent. As a result, it is now the largest U.S. long holding in the otherwise miniscule equity portfolio of the diversified distressed securities manager.

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Melvin Capital Management said that as of August 11 it beneficially owned 1.65 million shares of Carvana, or 10.2 percent of the online used car dealer. This was a revised 13G filing from Monday.

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