David Tepper isn’t a fan of Facebook or many social media platforms, but that doesn’t mean he’s staying away from buying the stock and other technology names.
Speaking at the Robin Hood Foundation’s annual investors conference, Tepper, founder of hedge fund firm Appaloosa Management, said that for any investors who believe Treasuries will stay close to their current yields for some time, the FAANG stocks — the top tech names — have been cheap. In fact, when asked what stocks he would hold if he knew he had to hold on for 10 years, Tepper answered that Amazon would be one.
Later on in Tepper’s interview by fellow hedge fund manager Paul Tudor Jones, the Appaloosa founder said he’s “shitload long” oil stocks and some commodities, according to a person who attended the conference.
Tepper argued that while some investors may rightly hate oil because of its environmental impact, the cheapest stocks right now, by almost any measure, are oil names, according to this person.
As part of a larger discussion about the Federal Reserve’s intentions with tapering and other monetary policy issues, Tepper addressed the central bank’s focus on getting wages to a higher level. It’s a “nice” idea in theory, the hedge fund manager said, but he’s concerned that automation will kill any advances on that front. If the Fed tries to push higher wages in the short term, for example, many companies will increasingly adopt new technologies to avoid high labor costs. As examples, Tepper said companies can potentially use facial recognition to avoid hiring additional ticket takers or use tablet apps that customers — not cashiers — can use to check out of stores or order food in restaurants.
On China, Tepper said he likes some companies in the country and holds some private investments there as well, but he said he limits his Chinese holdings to about 10 percent. He said h’s worried about the Chinese government’s lack of market rules and willingness to change rules on a whim, something that could wipe out an investment in its entirety.
When Jones asked him whether ESG is good for capitalism and the economy or whether companies should continue to focus on shareholders, Tepper’s answer was “shareholder primacy.” But he added that both approaches can work. He believes, for example, that carbon capture technology should be emphaszied as it’s essential for the environment and good for shareholders as well. But Tepper argued for taking a more moderate approach to issues like climate change and being realistic about how society can move in a more measured way toward big goals.
He joked that Engine No., 1’s recent victory in getting two activists on the board of Exxon was a signal to investors to buy oil companies. In part, that’s because fossil fuels will still be needed over the next 10 to 15 years even as supply is increasingly constrained by investors focused on ESG, Tepper said.