Tepper Adds to Korea ETF, Amazon and Micron as Ackman Reveals $2.4 Billion Microsoft Stake

US stocks fell on May 15 as hotter-than-expected inflation data and disappointment over a meeting between US and Chinese leaders weighed on sentiment. Chipmakers led the decline after Nvidia snapped an eight-session winning streak.

The S&P 500 fell 92.74 points, or 1.24%, to 7,408.5 on the New York Stock Exchange. The Nasdaq Composite dropped 410 points, or 1.54%, to 26,225.1. The Dow Jones Industrial Average lost 537.29 points, or 1.07%, to 49,526.17, falling back below 50,000 a day after retaking the level.

Nvidia, the world’s most valuable company, tumbled 4.42% as expectations faded for exports of its H200 chips to China. About $250 billion was wiped from its market value, which had reached a record $5.7 trillion a day earlier. Other semiconductor shares also slumped, including Micron Technology, down 6.62%, Intel, down 6.18%, Advanced Micro Devices, down 5.69%, and Broadcom, down 3.32%.

Software stocks bucked the broader selloff. Microsoft rose 3.05% after news that Bill Ackman’s Pershing Square had built a $2.4 billion stake.

◆ David Tepper adds Amazon, Micron and EWY; Berkshire makes surprise $2.6 billion Delta bet

After the close, investors also focused on 13F filings detailing major institutions’ holdings from January through March. David Tepper’s Appaloosa Management cut China exposure and initiated a South Korea-related exchange-traded fund position. Berkshire Hathaway, now led by Chief Executive Officer Greg Abel, Warren Buffett’s successor, sharply increased its stake in Alphabet.

US Securities and Exchange Commission filings showed Appaloosa increased its Amazon stake by 98% in the first quarter, lifting the position to 15.16% of its portfolio. The firm also aggressively added to Micron, Uber Technologies and Taiwan Semiconductor Manufacturing Co. It expanded its holding in the iShares MSCI South Korea ETF to about 5% of the portfolio, valued at $295.22 million.

Berkshire bought 39.8 million shares of Delta Air Lines in the first quarter, building a 6.1% stake worth $2.6 billion in Abel’s first quarter as chief executive. Delta shares rose more than 3% in after-hours trading on the news.

Buffett had sold all of Berkshire’s holdings in the four largest US airlines — Delta, Southwest Airlines, American Airlines and United Airlines — in 2020 during the Covid-19 pandemic. Berkshire’s renewed airline bet drew attention even as the industry faces pressure from surging jet fuel prices after the effective closure of the Strait of Hormuz during the US-Iran war, as well as Spirit Airlines’ failure to secure emergency financing.

Berkshire also bought an additional 36.4 million shares of Alphabet. By contrast, it sold its entire Amazon stake after Todd Combs, who had overseen part of the stock portfolio, left for JPMorgan Chase.

The conglomerate also initiated a position in Macy’s, the largest US department-store chain, which has struggled amid deteriorating business conditions. Macy’s shares jumped more than 5% after the filing was disclosed.

Berkshire also fully exited six other stocks in the first quarter: Visa, Mastercard, UnitedHealth Group, Diageo, Pool Corp. and Domino’s Pizza. UnitedHealth fell about 2.5% in after-hours trading despite raising its full-year guidance after Berkshire’s sale became public.

◆ Bill Ackman discloses Microsoft investment, says OpenAI stake alone is worth $200 billion

Pershing Square, Ackman’s hedge fund, disclosed the same day that it had built a new position in Microsoft. Ahead of the 13F filing, Ackman wrote on X that he had been able to buy a company he had followed for years at a very attractive valuation and was making it a core holding.

Ackman said investors had been overly worried when he made the investment in February that Microsoft 365, the company’s productivity software bundle, would lose ground to AI-native challengers. He also argued that the value of Microsoft’s OpenAI stake, equal to about 7% of Microsoft’s market capitalization, was not being properly reflected. Microsoft is estimated to hold an OpenAI stake worth about $200 billion after its early investment and subsequent funding rounds.

Ackman also said he tends to invest when stocks fall into undervalued territory, citing his sale of Google, one of his concentrated positions through last year.

The broader market was also pressured by a worsening macro backdrop. This week’s consumer price index and producer price index both reached their highest levels since the pandemic, raising the chances of a rate increase this year.

Bond markets also came under pressure as no clear solution emerged to end the war between the US and Iran or reopen the Strait of Hormuz. The two-year Treasury yield rose above 4%, the 10-year yield topped 4.6%, and the 30-year yield climbed past 5.1%.

With Kevin Warsh set to take office as Federal Reserve chair and preside over his first Federal Open Market Committee meeting next month, futures pricing is shifting. CME FedWatch data showed the probability of a December rate increase surged to 41% on May 15.

Michael Hartnett, Bank of America’s chief strategist, said investors still assume there will be no rate increase this year even under Warsh. If inflation does not cool, US consumer prices could rise above 5% around the November midterm elections, he added.

Kim Jong-hak, Korea Economic TV reporter, jhkim@wowtv.co.kr