If you haven’t achieved a billion-dollar net worth by investing wisely in stocks, there’s probably a lot you can learn from the few people you have.
One fund manager that most investors can learn a lot is David Tepper, the billionaire who manages the Appaloosa Fund. Since its founding in 1993, it has generated an average annual revenue of over 28%.
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In the fourth quarter of 2024, Tepper closed Adobe (NASDAQ: ADBE) Over $100 million. Also, in the fourth quarter, Appaloosa increased its shares in LAM Research. (NASDAQ: LRCX) 1.15 million shares
Tepper’s track record speaks volumes about its ability to choose good stocks, but even the best fund managers make decisions they regret. We’ll take a closer look at the recent results of these two companies to see if Adobe sales and LAM research acquisition is a wise move for the portfolio.
How long does Adobe sell?
Stock in Creative Cloud subscription providers has dropped by about 33% from their peak that has returned all along in 2021. The stocks aren’t working well, but the software business continues to grow. For the fiscal year ended November 29, 2024, total revenues increased 11% year-on-year.
Adobe’s revenue is rising more rapidly than its sales. Adjusted revenues rose 14.6% to $18.42 per share in fiscal year 2024. GAAP revenues that did not adjust for the $1 billion reverse termination fees that accrued when it abandoned Figma’s pursuit were up just 4.6% to $12.36.
The main advantage of Adobe is its powerful networking effect, and not necessarily great software. Last October, Photopea, a web-based Photoshop competitor, announced that it had served more than 1 billion files in the last 12 months. Photopea is developed by one man who works alone and is free to use. 4 years of Photoshop access run more than $1,000.
Adobe’s most popular products have many cheaper alternatives, but completing the project is a challenge. For example, among professional illustrators, Adobe Illustrator has its own file type. As a result, most print shops don’t know what to do with EPS files, despite this file type being used by many competing vector art applications.
A heavy investment in Adobe’s Generative Artificial Intelligence (AI) capabilities can make the product more sticky and offset non-professional users who no longer want to pay for expensive, repeat subscriptions . Selling this stock doesn’t seem like the right move now, as it is likely that it has foreseeable future subscribers due to its strong network effects.
Are you buying Lamb research now?
LAM Research is a member of a small group of companies that produce advanced etch and deposition equipment used in the manufacture of semiconductors. Place billions of small transistors on a silicon wafer requires incredible accuracy as they are spaced a few nanometers apart.
LAM research is even more envious than most peers, as it specializes in the process of stacking semiconductor components with each other. LAM verticalization expertise allows us to produce equipment used to manufacture high-bandwidth memory (HBM), an increasingly important component of AI processing. The HBM chip market is expected to surge from $4 billion in 2023 to $130 billion by 2029.
In 2024, LAM Research increased its adjusted earnings by 23% per share to $3.36, allowing investors to reasonably expect more profits over the next few years. This is because it is not necessarily important which memory chip maker will gain a major share of the HBM memory chip space. A very limited number of etch and deposition equipment manufacturers with verticalization expertise means most of the winners, and the losers will end up buying equipment from LAM research.
Sales of LAM Research equipment could surge behind the demand for AI, but the market seems to be unaware. At recent prices, this well-positioned stock in Picks-Shovels Business can be scooped with expectations of just 21.9 times the future revenue. Following Tepper’s lead in this case, it seems to be a very clever move.
Don’t miss this second chance with a potentially advantageous opportunity
Have you ever felt like you missed a boat when buying the most successful stocks? If you do that, you’ll want to hear this.
In rare cases, a team of analysts issue “double-down” stock recommendations for companies they think they are trying to pop. If you’re worried that you’ve already missed the chance to invest, now is the perfect time to buy before it’s too late. And the numbers speak for themselves:
nvidia: If you invest $1,000 when it doubled in 2009, There’s $350,809! *Apple: If you invest $1,000 when it doubled in 2008, you’ll have $45,792! *Netflix: If you invest $1,000 when it doubled in 2004, then $562,853! *
Currently, we are issuing “double-down” alerts to three incredible companies, and we may not have a chance like this anytime soon.
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*Stock Advisor will return as of February 3, 2025
Cory Renauer has no position in any of the stocks mentioned. Motley Fool has a job in researching Adobe and Lam. Motley Fools have a disclosure policy.
The views and opinions expressed herein are the views and opinions of the authors and are not necessarily Nasdaq, Inc. It does not reflect the opinions of
