Sun, Jun 26, 2016
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 Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Global markets fell, hedge funds gain in mid-June on Brexit, Fed rate concerns[more]

    Komfie Manalo, Opalesque Asia: Global financial markets declined through mid-June, as uncertainty associated with the upcoming Brexit referendum and expected U.S. Fed interest rate hike contributed to increases in volatility across asset classes, data provider