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Highest-Earning Guru David Tepper Makes $2.2B - How Did He Do It?

March 21, 2013 | About:
Sally Jones

Sally Jones

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Investor Guru David Tepper, founder of Appaloosa Management, was listed by Forbes recently as the highest-earning among the top 40 hedge fund managers and traders. Tepper personally made $2.2 billion in 2012, beating out the other top 10 Gurus Carl Icahn, Steven Cohen, James Simmons, George Soros, Ken Griffin, Ray Dalio, David Shaw, Leon Cooperman and Daniel Loeb. Tepper’s hedge fund, Appaloosa Management, also had a high with net returns of almost 30% last year. Appaloosa has an average annual return of 23.3% over five years, and 29.2% since inception in 1993.

The question on everyone’s mind is: How did he do it? How did David Tepper make so much money last year? The answer, in part: Tepper bet heavily on technology giant Apple Inc. (AAPL) increasing his stake as follows:

Apple Inc. (AAPL)

As of the quarter ending Dec. 31, 2012, David Tepper owns 912,661 shares of AAPL, valued as $486 million, and accounts for 10.5% of his equity portfolio. Tepper added his positions in the Sept. 30, 2012 quarter by 0.94%, again in the Dec. 31, 2012 quarter by 75.11%.

Currently Appaloosa Management’s top public equity holding, Apple Inc. has a market cap of $428.8 billion; its shares traded around $456.4 with a P/E ratio of 10.41 and P/S ratio of 2.6. The dividend yield of Apple Inc. stocks is 1.8%. Apple Inc. had an annual average earnings growth of 81.6% over the past 10 years.

GuruFocus rated Apple Inc. the business predictability rank of 4.5-star.

His holding history:



Commenting on how he founded Appaloosa Management, according to a Bloomberg interview, Guru Tepper said: "After you work on Wall Street, it's a choice, would you rather work at McDonald's or on the sell side? I would choose McDonald's. Over the sell side." As a young boy, Tepper became interested in the stock market watching his father trade stocks in his hometown of Pittsburgh.

With a track record of robust philanthropy, Tepper donated a record $55 million to his alma mater Carnegie Mellon University in 2004, the largest donation in its 104-year history.

Tepper’s portfolio lists 57 stocks with a total value of $4.6 billion, and a quarter-over-quarter turnover of 22%.

Tepper’s other top buys, sells and holdings:



Read more about David Tepper’s Top 5 Buys.

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 2.9/5 (8 votes)

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