David Tepper, founder of the $12.4 billion hedge fund Appaloosa Management, is known for his reluctance to give interviews. But when he speaks, you should damn well listen–as was the case this morning when Tepper sat down for an interview with CNBC. The fund manager raked in around $7 billion in 2009 buying bonds and stocks in distressed financial companies, personally taking home more than $4 billion, making him the year’s highest-paid hedge fund manager. Tepper stated that over 17 years he has compounded 30% for his investors by seeking out special opportunities in financial markets. Right now, he sees heightened opportunities in equities.
Tepper believes that there are two scenarios that could play out over the next few years: the economy will recover, or the recovery will falter, prompting the Federal Reserve to intervene with quantitative easing. He views either scenario as bullish for equities. Appaloosa generally has a 70-30 allocation for bonds-stocks. While he cautioned that he is not “going balls to the walls”, Tepper said he is beginning to skew that allocation ratio in favor of equities.
While the airways have been filled with the toxic air of doom and gloomers and delusional technicians who think the DOW is going to 2,000, Tepper’s simple and sensible approach to today’s stock market is refreshing. Government intervention in the financial markets is not an ideal scenario, nor is front-running the Fed, but as Tepper says, “What, I’m going to say, ‘No Fed, I disagree with you, I don’t want to be long equities?'” While many have hinted at this train of thought, none have had the conviction to put their money where there mouth is like Tepper. This market has withstood all the negative headlines from home, Europe, Asia and wherever else the world is about to end. The bottom line is: the powers that be are determined to take stocks higher, who are we to fight it?
Full Interview with Appaloosa’s David Tepper:
