Fund Boss Made $7 Billion in the Panic

[Blue_Tires]

Source: WSJ

In this comeback year for investors, David Tepper may have scored one of the biggest paydays of all.

Mr. Tepper's hedge-fund firm has racked up about $7 billion of profit so far this year—with Mr. Tepper on track to earn more than $2.5 billion for himself, according to people familiar with the matter. That is among the largest one-year takes in recent years.

Behind the wins: a bet worth billions of dollars that America would avoid a repeat of the Great Depression.

Through February and March, Mr. Tepper scooped up beaten-down bank shares as many investors were running for the exits. Day after day, Mr. Tepper bought Bank of America Corp. shares, then trading below $3, and Citigroup Inc. preferred shares, when that stock was under $1. One of his investors insisted more carnage loomed. Friends who shared his bullish beliefs were wary of aping his moves amid speculation that the government was about to nationalize the big banks.

"I felt like I was alone," Mr. Tepper recalls. On some days, he says, "no one was even bidding."

The bets paid off. A resurgent market has helped Mr. Tepper's firm, Appaloosa Management, gain about 120% after the firm's fees, through early December. Thanks to those gains, Mr. Tepper, who specializes in the stocks and bonds of troubled companies, manages about $12 billion, a sum that makes Appaloosa one of the largest hedge funds in the world.

Mr. Tepper, whose office overlooks the parking lot of a Hilton hotel in Short Hills, N.J., across from an upscale mall, now is taking aim at a new target. He's purchased about $2 billion of beaten-down commercial mortgage-backed securities. Among his purchases are bonds backed by chunks of the debt of Peter Cooper Village & Stuyvesant Town and 666 Fifth Ave. in New York, two high-profile real-estate deals that have fallen in value over the past two years.



Read more: http://finance.yahoo.com/career-work/article/108451/fund-boss-made-7-billion-in-the-panic?mod=career-leadership

---

funny how no matter what happens; there is always someone there to profit...

[WriteDown]

1. Good for him...

He analyzed correctly. Wish I had done the same.

[bahrbearian]

2. I wish that they had Nationalized the Banks.

[Wilms]

Tepper knew they wouldn't. n/t

[NeoConsSuck]

36. So do I

but you have to have nerves of steel, which I don't have. I bought a financial ETF, UYG, in March, but then panicked and sold it when it turned south.

I bought it back and have made money, but not as much as if I would have held it in March.

Usually, I zig, and the market zags, and when I zag, the market zigs.

[TalkingDog]

3. I only have one thing to say about that:

http://www.dailymail.co.uk/news/article-1237470/Priest-advises-congregation-shoplift.html

[tomm2thumbs]

4. what does one person do with 3 billion dollars that 1 billion wouldn't make them just as satisfied?

oh dear, waiting for the responses makes my toes quiver

[dysfunctional press]

5. go out and earn yourself 3 billion dollars- and you'll get your answer.

tepper did.

[BR_Parkway]

7. When did shuffling money or stocks go from gambling to earning?

seems like that's part of the problem, everyone moving financial instruments around for a quick gain, but very little being done that benefits others in society in the long run. I wonder how many folks in the stock markets even remember the basics of stocks providing expansion and working capital to companies with good ideas anymore. Looking at things like the all Holy Dow compared to any value or earnings benchmark sure doesn't seem like they do

[dysfunctional press]

8. when they started giving people paychecks to do it.

and without the money-shufflers earning THEIR pay, a WHOLE LOT of small businesses and large ones alike, wouldn't even BE in business to put people to work making things to earn their pay.

[paulsby]

11. you've obviously never traded for a living

trading is hard work. pit trading is very physical and demanding. screen trading is very demanding, but in a different way.

i've day traded stocks and futures for years. it requires (at least for me), a lot of research, a lot of discipline, strong nerves, a level head, etc.

many people lose a lot of money trading. it's difficult.

traders, among other things, provide liquidity and help with price discovery.

[PM Martin]

17. I though you were in law enforcement?

[paulsby]

19. this is america

there is nothing about being a leo that prevents me from daytrading stocks and futures. i invest a fair %age of my earnings into longterm stuff through my deferred comp and DCA account and also have a few accounts i use for datrading, swing and scalping.

the nice thing is that the market is always there. forex is 24 hrs, foreign markets are open at night (hong kong, japan), and on days i want to trade the spooge (s&p) or dow, it's there during the daytime.

i'm also a guitarist and a competitive athlete. life is full. iactually do a fair %age of posting when i'm IN a trade, since the WORST thing to do when IN a trade is over-analyze it. once i am in a trade and i set my stops, i leave the results to the market. keeps emotion out

emotion is the death of the trader

[PM Martin]

20. A daytrader.

I see. It sounded as you may have been a full-time trader.

[paulsby]

22. i have some weeks

where i am pretty close to full time. i wake up just before the S&P cash session opens, and trade the day (i take a nap during lunch doldrums). right now, i am in a very heavy training cycle, post surgery to get my strength back, so trading is on the back burner.

i know some traders who think you need to be in the market every day, or you lose focus.

i personally don't find that to be the case. my methodology allows me to be a part time trader. fully focused WHILE trading, but often out of the market for days at a time.

[Threedifferentones]

32. Earned?

Haha. This guy "earned" his money about as legitimately as the BFEE and Mexican drug cartels. Wall Street has been full of legalized fraud for decades, and this guy correctly realized that the government would sooner make rich people richer at our expense than reorganize the system to be remotely fair to people of ordinary means. And you, a 1000+ poster on DU, seem to admire this? How about you go out and EARN yourself $7.50 an hour cleaning this guy's toilets before you make any more posts about American economics...

[Tansy_Gold]

33. THANK YOU

You just saved me from having a stroke.



TG2012

[dysfunctional press]

34. earned.

what was illegitimate about the way he did it?
he didn't make the rules, you know.
or do you? :shrug:

[WriteDown]

35. You're exactly right. You have to turn a wrench to earn money!

Down with the white-collars!

[girl gone mad]

6. I posted this during the "panic", but here's a reminder..

[Name removed]

9. Deleted message

Message removed by moderator. Click here to review the message board rules.

[gorfle]

10. Time to go invest in Health Insurance Companies.

With the imminent passing of the health care reform bill, it looks like health insurance companies will be a sure bet for profits, too.

[proteus_lives]

12. If he didn't do anything illegal or immoral then good for him.

[Dreamer Tatum]

13. Not only did he not do anything illegal, but he may have saved those stocks altogether nt

[Po_d Mainiac]

14. Why does Goldman Sachs name keep coming up??

http://en.wikipedia.org/wiki/David_Tepper

Here is a snip from his Wiki bio

In 1984, he was recruited to Keystone Mutual Funds (now part of Evergreen Funds) in Boston, and in 1985, Tepper was recruited by Goldman Sachs, which was forming its high yield group. He joined the firm in New York City as a credit analyst. Within six months, Tepper became the head trader on the high-yield desk at Goldman where he worked for eight years. His primary focus was bankruptcies and special situations. He left Goldman in December 1992 and started Appaloosa Management in early 1993.

[cowcommander]

15. Damn, should've invested back then too...

Oh man, where is my time machine?

[high density]

16. Well at least he didn't seem to bet against us

He obviously had great timing.

[PM Martin]

18. How could you go wrong with all of the tax payer funded bailouts?

Mr. Tepper is no genius, he merely saw an opportunity and ran with it.
For that, he should be paying more taxes than he already does.
Warren Buffett agrees.

[AlphaCentauri]

21. So he indirectly used tax payers money for profit

great, how about the rest of us?

[Turborama]

23. Massive bet on RBS and Lloyds helped financier earn $2.5bn

Source: The Guardian

A billion-dollar bet on Britain's state-supported Lloyds and RBS banking groups has helped a US hedge fund manager secure a personal payday of $2.5bn (£1.55bn), the Guardian has learned.

David Tepper, a former Goldman Sachs junk bond trader, has steered his New Jersey-based hedge fund, Appaloosa Management, to a $7bn profit so far this year by taking a sanguine view that banks caught up in the global credit crunch would eventually weather the worst financial storm since the second world war.

Tepper took large positions early this year in debt and equity issued by struggling Citigroup and Bank of America, which have since recovered from the brink of collapse to firmer footing. The Guardian has learned that Appaloosa also took a combined investment position of more than $1bn in Lloyds and RBS, which have undertaken massive fundraisings this year to bolster their balance sheets.

Appaloosa was a major participant in complex debt exchange offers executed by the two banks during 2009 to strengthen their balance sheets in the wake of bail-outs by the government. Tepper said he believed that Lloyds would ultimately emerge in a healthy condition. "With the recapitalisation of Lloyds, I think once again Lloyds will be one of the best banks in the world."

Read more: http://www.guardian.co.uk/business/2009/dec/22/massive-bet-rbs-lloyds-earns-billions

---

Isn't this sort of practice called "insider trading"? The article goes on to say that this year he has made "overall gains across his fund of $4.5bn."

[Demeter]

24. I'd Bet Money on It Being Exactly That: Insider Trading

and even more money that it will never be prosecuted or even investigated.

[dysfunctional press]

29. ummm- how so...?

he made a successful and educated bet that the u.s. wouldn't nationalize the banks.

[PM Martin]

25. Without tax payer bailouts, these fortunes could not exist.

[bertman]

26. This man, now being a multi-billionaire, is the type of human who is revered as "smarter"

than the rest of us. Smart for being able to learn a system that makes lots of money and to take (and win) a gamble. What is this person's contribution to the well-being of the planet, of the community in which he lives?

Does this man give a thought to the hundreds of millions of his fellow Americans who work for a living down in the other part of the world where income is usually registered in the thousands, not billions?

Of course, I don't know this man. But I cannot help but wonder what he is like. His billions of dollars of wealth will now wield a huge influence over the rest of us. I hope his heart is pure and generous and merciful.

[PM Martin]

27. Tepper has street "smarts" but not the traditional

types of intelligence nor will to make the world better.

[Nihil]

31. Maybe it's time for a counter-example ...

... such as that provided by a length of rope and a street-lamp ...?

:shrug:

[boppers]

28. Madly profiting is not insider trading.

OTOH, if he knew about specific bailout packages *before* others, and bought stock, that could be worth jail.

[Turborama]

30. This is what got me thinking along those lines...

"Appaloosa was a major participant in complex debt exchange offers executed by the two banks during 2009 to strengthen their balance sheets in the wake of bail-outs by the government."