David Tepper / Getty
In 2012 Tepper succeeded in achieving a 30 percent gain on the $20 billion that he managed, which entitled him to pay himself $2.2 billion in salary and bonuses then, as well as placing him very much at the top of the ladder on the highly regarded Institutional Investor Alpha’s annual “Rich List” made up of the top 25 hedge fund managers.
Now all indications are that in 2013 Tepper may be set to do even better, with his Palomino fund reportedly showing an increase of 38 percent, after management fees for the first 11 months of 2013, up to the end of November. With no signs of the fund losing any impetus whatsoever in December, then David Tepper looks like being one of the few fund managers to register a higher return on investments than the formidable 29.1 percent gain that the S&P 500 itself has reported in the same period.
When questioned about the secrets behind his success in recent years, Tepper points largely to his ability to assess and successfully gauge swings in worldwide trends.
Tepper stood out from the crowd of investment bankers and hedge fund managers through his refusal to be pressurized by what economic analysts describe as “inflation hysteria.”
Hysteria that led many other fund managers to attack the Federal Reserve for its quantitative easing policy, and invest in gold as a hedge. A policy that cost many of his colleagues and counterparts dearly.
Tepper has also invested consistently in 2013 in US airline stocks, gaining handsomely on Delta Air Lines, whose stocks have risen by 128 percent during 2013 as well as United Continental Holdings, who have shown an increase of 57 percent in stock value during the year to the end of November. Tepper’s belief in the US aviation industry is indicated by the fact that durrently stock in airlines makes up for more than $600 million of Tepper’s Appaloosa Management stock portfolio.
Since Tepper launched Appaloosa Management in 1993, the fund has remarkably returned 27 percent ever year to their investors, with another contrast in financial management trends being that these returns have risen even as the fund has grown in size, in direct contrast to normal hedge fund behavior.
As a result of his fund being so consistently successful, and to dilute the levels of investment, Tepper has made it a practice every year to return some of their principal amount to his investors, with the expectation being that Appaloosa Management will be returning around $2 billion to their clients again this year.
According to Forbes David Tepper has a net worth of US$7.9 billion as at September 2013, and is ranked #166 on their world billionaires list. All things being equal, this figure may be about to rise substantially in the coming days.
David Tepper, graduated with an economics degree from the University of Pittsburgh in 1978 and then an MBA from Carnegie Mellon University in 1982.