Mon, Nov 30, 2015
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

With 117% returns in 2009, Appaloosa tops Bloomberg Markets' list of the best performing hedge funds, Renaissance Technologies' Medallion fund tops the list of most profitable hedge funds with over $1bn in profits

Friday, January 08, 2010
Opalesque Industry Updates - Appaloosa's David Tepper bet big on struggling banks early in 2009. His flagship fund's gain of 117 percent put him at the top of Bloomberg Markets' roster of best-performing hedge funds.

David Tepper often throws a $20 bill on the floor when he's weighing a big investment with analysts at Appaloosa Management LP. "Would you pick that up?" Tepper, founder and president of Appaloosa, asks them. His point: The best trades can be like found money.

That was the case in early 2009, he says. Shares of banks such as Citigroup Inc. and Bank of America Corp. were collapsing on rumors they would be nationalized. On Feb 25, the US Treasury put out a white paper and a term sheet on its Web site for the government's Capital Assistance Program. They said the preferred stock the government was buying in the banks would be convertible to common shares at prices far above where they were trading - 37 percent higher in the case of Citigroup and 21 percent for Bank of America.

For Tepper, 52, that meant it was time to buy. "If the federal government was putting out this paper, they weren't going to nationalize the banks," he says. Second the conversion price of the preferred shares meant the bank stocks were seriously underpriced. "It was crazy," says Tepper, a Pittsburgh native. "In February and early March, people were in a panic.".

Appaloosa began scooping up bank-related securities - including common and preferred shares and junior subordinated debt. The Short Hills, New Jersey-based hedge fund firm bought into Bank of America, Citigroup, Fifth Third Bancorp and SunTrust Banks Inc. Tepper also bought the bonds of New York-based American International Group Inc, Frankfurt-based Commerzbank AG and London-based Lloyds Banking Group Plc, paying as little as a nickel on the dollar. As the stocks and bonds rose later in the year - Bank of America and Citigroup shares surged 330 percent and 223 percent from Feb 28 through September - Appaloosa made more than $1 billion...

The full Bloomberg Markets Cover Story may be accessed here: Source


What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Hedge fund marketing and the selling cycle[more]

    By Bruce Frumerman. How long is the selling cycle now? That’s a question my financial communications and sales marketing consulting firm has been asked on a regular basis by hedge fund firm owners and sales people, ever since we opened the doors to our firm in 1987 pre-crash. Wa

  2. People - Solus Alternative Asset Management adds chief strategist from BTIG[more]

    From Daniel Greenhaus joined hedge fund manager Solus Alternative Asset Management as managing director and chief strategist. He will work closely with Chris Bondy, Solus’ chief economist, managing director and executive vice president, said Chris Pucillo, CEO and chief investmen

  3. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the

  4. Opalesque Roundtable: Family offices flock to co-investment[more]

    Bailey McCann, Opalesque New York: Co-investments have been a hot topic for pension funds in recent years, as they try to move away from high fees and improve transparency. But now, family offices are more readily getting into the mix and establishing in-house deal teams, according to the delega

  5. More institutional investors invest in CTAs compared to last year despite dissatisfaction with performance[more]

    Benedicte Gravrand, Opalesque Geneva: "Despite a strong start to 2015 for CTAs in Q1, commodity market conditions have made return generation difficult for fund managers over much of the rest of the year to date," says Preqin’s November