Sat, May 30, 2015
A A A
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

kb

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. Opalesque Exclusive: New TMT hedge fund adopts the long-term approach[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Adam Parker founded Center Lake Capital LLC in New York in November 2014. Before that, he was portfolio manager at Point State Capital (the successor fund to Dr

  2. Investing - Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds, Hedge funds buy Actavis, Valeant. ETFs join the party, The most loved biotechs of big hedge funds, Stocks to buy ... according to hedge funds, Atlantic City bond offering attracts hedge funds as buyers, Okumus Fund Management discloses huge new Ascent Capital Group stake[more]

    Hedge funds buy swathes of foreclosed subprimes, force up rents, float rent-bonds From Boingboing.com: When a giant hedge fund is bidding on all the foreclosed houses in a poor neighborhood, living humans don't stand a chance -- but that's OK, because rapacious investors make great landl

  3. Institutions - Institutional investors turn to real estate, planes, Assets at Bostonís five biggest family nonprofits rise to $3.5bn[more]

    Institutional investors turn to real estate, planes From Joins.com: The National Pension Service and domestic emerging market specialists who did not know where to invest in a low interest rate environment are turning to other investments like the blue-chip real estate market abroad.

  4. Regulatory - Hedge funds face tax as Iceland poised to end capital controls, Comment: Why alternatives need more transparency, not enforcement[more]

    Hedge funds face tax as Iceland poised to end capital controls From Bloomberg.com: Hedge funds and other investors who bought claims against Icelandís failed banks face a tax that targets the lendersí estates as the government prepares to unveil its plan for exiting capital controls in t

  5. Investing - Nelson Peltzís Trian Fund Management reduces position in Legg Mason, Biotech investors up big amid bubble talk, Hedge funds increase exposure in healthcare[more]

    Nelson Peltzís Trian Fund Management reduces position in Legg Mason From Octafinance.com: Trian Fund Management has filled a SC 13D/A form regarding Legg Mason, Inc. Per Nelson Peltzís Trian Fund Managementís filing, the filler reported decreased stake in the company by -11.05% to 11,03

 

banner