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Billionaire David Tepper Places Bet on 3 ‘Strong Buy’ Stocks
Michael MarcusMichael Marcus
Jun 04, 2021, 9:27 AM

https://www.tipranks.com/news/article/billionaire-david-tepper-places-bet-on-3-strong-buy-stocks

Every investor wants an ‘in,’ some key to unlock the best returns in the markets. For some, that key can be found in following the market’s legendary investors, the stock gurus who have leveraged their intuition and knowledge to build up billion-dollar fortunes. And among those legendary investors, David Tepper stands tall.

Tepper is the co-founder of Appaloosa Management, which he launched in 1993 after leaving Goldman Sachs. The hedge management firm took off with $57 million initial seed money, and since then it has been ever upwards; Appaloosa had $12 billion in assets under management in 2021.

Looking into Appaloosa basket of stocks, we’ve chosen three of the fund’s new holdings that TipRanks’ database reveals as “strong buys” and offer healthy upside potential. Let’s take a closer look and see what Wall Street analysts have to say.

Paysafe (PSFE)

Based on the Isle of Man under UK regulation, Paysafe is a multinational online payments processor, offering services through its eponymous brand as well as through its subsidiaries, including Neteller and Skrill. The company saw a transaction volume of $92 billion last year, from businesses and consumers in 40 currencies around the world. Paysafe’s payment solutions are geared for mobile use, and offer real-time analytics.

Like many companies in the last two years, Paysafe jumped on the SPAC wagon, entering the public markets through a merger transaction with a special purpose acquisition company (SPAC), in this case, Foley Trasimene Acquisition Corporation II. Paysafe and Foley completed the merger process in March of this year, and on March 31 PSFE shares started trading on the New York Stock Exchange.

This past May, Paysafe released its first earnings report as a public company. For the first quarter, the company showed revenue of $377.4 million, up 5% year-over-year, derived from a total payment volume of $27.7 billion, up 8% yoy. The company firmed up its balance sheet through a one-time debt reduction payment of $1.2 billion, made after the SPAC merger, and ended the quarter with a free cash flow of $108.5 million, up 28% from the year-ago quarter.

Tepper, in his 13F filing for Q1, revealed that his fund purchased 10 million shares of PSFE, a huge investment in the new stock. At current valuation, this holding is worth $118.2 million.

Covering Paysafe for RBC, 5-star analyst Daniel Perlin reminds investors that there are considerable gains in store for PSFE in 2021. Perlin rates PSFE an Outperform (i.e. Buy), and his $19 price target implies an upside of 61% on the one-year time horizon. (To watch Perlin’s track record, click here)

“We believe PSFE offers a unique combination of digital wallet capabilities, accelerated cash conversion for consumers who would otherwise be out of the ecom loop, and integrated payments, all focused on specialized & complex end-markets, which creates a competitive moat and pricing power,” Perlin opined.

Perlin adds his view that Paysafe offers one of the best combinations of services in online payment space: “PSFE has created a unique two-sided network enabling merchants to accept online & in-store payments (in specific niche verticals), while also offering consumers a digital wallet & eCash solution, which converts cash-heavy users to digital users. We believe it’s this combination that enables PSFE to generate superior take rate economics vs. peers.”

Overall, it’s clear that Wall Street’s analysts generally agree with Perlin. Paysafe has 6 reviews on record, and all are positive, making the analyst consensus a unanimous Strong Buy. The average price target of $17.67 suggests an upside of ~50% from the trading price of $11.82