Tepper's Appaloosa Hedge Fund Has a Blockbuster Year
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Overall Analyst Rating:
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Dividend Yield: 2.1%
EPS Growth %: +23.6%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 2.1%
EPS Growth %: +23.6%
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David Tepper's hedge fund has taken in $7 billion in profit this year, nettimg himself about $2.5 billion and among the largest one-year takes in recent years, according to a Wall Street Journal article.
Tepper accomplished these numbers by taking a bet that the country's banks would not fail, as he spent most of the early part of 2009 scooping up shares of Bank of America Corp. (NYSE: BAC) when they were trading below $3, and Citigroup (NYSE: C) under $1.
Others were hesitant to mimic Tepper's strategy, as fear loomed that the government was going to nationalize banks.
Appaloosa Management, Tepper's firm, saw a gain of nearly 120 percent through early December for one of the largest hedge funds in the world.
Tepper's next move could be towards another battered victim of the "Great Recession" as he has sunk $2 billion into commercial mortgage-backed securities. Experts have said that more dark days for commercial real estate could be on the way, and that Tepper is jeopardizing the recent gains that he has made on this move.
The downturn of 2008 left a wasteland of hedge funds in its wake with 1,500 funds, 16 percent of the total shuttering. The past year has seen a rebound of the once darling investments, with total gains of 19 percent in 2009.
Even with his recent success, Tepper is also known for abrupt losses in the past including his big wager on Delphi that cost Appaloosa $200 million and his bullish approach on large-company stocks in 2008 which suffered as the markets declined.
Tepper's investment strategy is summed up in his belief that optimism is usually rewarded.
"Investing with David is like flying, with hours of boredom followed by bouts of sheer terror," Alan Shealy, a client of Tepper's for more than 18 years said. "He's the quintessential opportunist, investing in any asset class, but you have to have a cast-iron stomach."
Tepper persists that, "If you think the economy will be fine, as we do, then we're going to do very well."
Tepper accomplished these numbers by taking a bet that the country's banks would not fail, as he spent most of the early part of 2009 scooping up shares of Bank of America Corp. (NYSE: BAC) when they were trading below $3, and Citigroup (NYSE: C) under $1.
Others were hesitant to mimic Tepper's strategy, as fear loomed that the government was going to nationalize banks.
Appaloosa Management, Tepper's firm, saw a gain of nearly 120 percent through early December for one of the largest hedge funds in the world.
Tepper's next move could be towards another battered victim of the "Great Recession" as he has sunk $2 billion into commercial mortgage-backed securities. Experts have said that more dark days for commercial real estate could be on the way, and that Tepper is jeopardizing the recent gains that he has made on this move.
The downturn of 2008 left a wasteland of hedge funds in its wake with 1,500 funds, 16 percent of the total shuttering. The past year has seen a rebound of the once darling investments, with total gains of 19 percent in 2009.
Even with his recent success, Tepper is also known for abrupt losses in the past including his big wager on Delphi that cost Appaloosa $200 million and his bullish approach on large-company stocks in 2008 which suffered as the markets declined.
Tepper's investment strategy is summed up in his belief that optimism is usually rewarded.
"Investing with David is like flying, with hours of boredom followed by bouts of sheer terror," Alan Shealy, a client of Tepper's for more than 18 years said. "He's the quintessential opportunist, investing in any asset class, but you have to have a cast-iron stomach."
Tepper persists that, "If you think the economy will be fine, as we do, then we're going to do very well."
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