Tepper's Q2 2026 Rotation

Overview

Appaloosa Management's Q2 2026 13F shows total assets surging from $5.93B to$7.47B, a quarter of aggressive de-risking after a +32.0% H1 2026 gross return. David Tepper harvested gains from cyclical memory-chip pure-plays, rotated into mega-cap platform monopolies, and layered on a large synthetic macro hedge via Apple put options — all against a macro backdrop of disinflation colliding with labor-market softening.

Key Concepts

• ASICs (Application-Specific Integrated Circuits) — Customized microchips designed for a specific application, such as AI training, rather than general-purpose use.
• HBM (High-Bandwidth Memory) — A specialized, high-performance RAM interface widely used in data centers for AI processing; the demand driver behind the Q1 memory-chip thesis.
• PPAs (Power Purchase Agreements) — Long-term contracts to supply electricity, crucial for data centers securing baseload power from producers like Vistra and NRG Energy.
• ADRs (American Depositary Receipts) — Certificates issued by a U.S. bank representing shares in a foreign stock, traded on U.S. exchanges; the vehicle for Appaloosa's Chinese-equity exits.

Portfolio Rotation (Q1 → Q2 2026)

Top holdings (June 30, 2026): AMZN (15.95%, +15.74% Q2), MU (15.06%, -41.44% Q2), TSM (10.55%, +24.29%), GOOG (8.75%, +6.77%), UBER (7.43%, +21.50%).

Full exits: SanDisk (SNDK, was 3.01%), Corning (GLW, was 2.59%), PDD Holdings (was 1.55%), Lyft (was 0.61% — consolidated entirely into Uber).

The AI Trade Maturation

• Phase 1 — Memory & Hardware Cyclicality: Pure-play memory providers (MU, SNDK) rode explosive HBM demand; liquidated as capacity expansion signaled an approaching supply glut.
• Phase 2 — Platform Scale & Custom Silicon: Rotation into hyperscalers and custom chip designers (AMZN, GOOG, and a new AVGO position at 0.76%) for vertical integration and durable free-cash-flow protection.
• Infrastructure and power bets: New positions in CoreWeave (CRWV, 1.44%, GPU-as-a-Service) and SpaceX (SPCX, 0.51%), plus retained Vistra (4.70%) and NRG Energy (3.44%) stakes as bets on grid power as the ultimate AI bottleneck.

The De-Risking Trigger

Worked example (Micron, illustrative): Market Price $1,154.00 vs. Intrinsic Value ≈$686.90 gives a Valuation Premium of 68.0% — well past the ~50% threshold the fund's model uses to trigger a sell-into-strength exit, which drove the Micron harvest.

Tactical Whipsaws

Appaloosa fully exited airlines (AAL, DAL, UAL) in Q1 2026, then reversed hard in Q2: a new 7.5M-share AAL position (1.81% weight) bought under $15/share on a compressed forward P/E and$2B FCF pipeline, plus 800k shares of Boeing (BA) bought at peak operational despair.

Hedging the Heights: The Apple Put Strategy

• Position: 835,000 AAPL put contracts.
• Weight: 3.13% of the portfolio (~$241.6M equivalent value).
• Function: A synthetic macro hedge — because AAPL anchors the S&P 500 and Nasdaq 100, these puts provide non-linear payoff buffering against broad index drawdowns or hawkish rate shocks, insulating the fund's heavy mega-cap tech concentration (AMZN, GOOG, META, TSM, NVDA).

Key Takeaways

• Defensive rotation: Assets grew from $5.93B to$7.47B while capital shifted from high-beta semiconductor momentum into mega-cap technology monopolies.
• AI maturation: Profit-taking on memory pure-plays in favor of scalable platform compute.
• Macro hedging: A 3.13% AAPL put weighting to insulate against index-wide tech multiple compression.
• Contrarian agility: Full Q1 exits from airlines/aerospace followed by aggressive Q2 distressed re-entries in the same names.
• Structural China de-risking: Complete exit from PDD, JD.com, and KWEB, with BABA trimmed 42.28% to a 2.57% weight.

Related Reading

• Appaloosa Management Q2 2026 13F Institutional Analysis
• Full Research Paper