(GuruFocus, Updated on July 6, 2009) David Tepper Hoarded Cash in 2008 David Tepper is a successful hedge fund manager and the founder of Appaloosa Management. With an estimated current net worth of around $1.2 billion, he is ranked by Forbes as the 601th richest person in the world.
Known as one of the country’s most successful hedge-fund managers, David Tepper initially became interested in the stock market as a young boy watching his father trade stocks in his hometown of Pittsburgh. Today, as president and founder of Appaloosa Management, Tepper has earned an international reputation for producing some of the highest returns amongst fund managers on Wall Street. One expert has referred to him as "the best trader in his space."
Tepper was the head trader on the high-yield desk at Goldman Sachs where he worked for eight years. His primary focus was bankruptcies and special situations. He left Goldman in December 1992 and started Appaloosa Management in early 1993. According to the speech he gave in the Business School that bears his name, at least through 2007, David Tepper claimed to be a value investor, looking for long term gain in stocks. We can dispute the merit of his claim and question his definition of “value investor”, but we cannot argue with his success.
Forbes reported in March 2009 that David Tepper, “ Feared prolonged economic slowdown; directed money managers at his Appaloosa Management hedge fund to move billions of dollars out of equities and into cash between June and October of last year.” If that is case, at least he is a good market timer during the stock market crash of 2008.
Still, according to Alpha website, David Tepper’s funds, Appaloosa Investment I and Palomino were each down about 26 percent in 2008. The website stated that David Tepper lost about $450 million in 2008.
David Tepper Returns
GuruFocus Data shows that David Tepper returned in full force, in Financials that is. Data shows that a good 57% of his equity holdings are Financials as of March 31, 2009.
Most of the 1Q09 new purchases go to three banks: Bank of America Corp. ( BAC), Fifth Third Bancorp ( FITB), SunTrust Banks Inc. ( STI)
All three bank stocks are new positions taken in 1Q09. The betting in the banks is paying off. Since March 31, 2008, the equity portfolio of David Tepper is up about 77.4%, thanks largely to the substantial run-up of the banks. Green shoots or not, a gain is a gain. The timely betting on Financials goes a long way in helping David Tepper to recoup his losses last year.
No. 1: Bank of America Corp. (BAC, Financial), Weightings: 38.25% - 47,550,000 Shares
Bank of America Corp. is one of the world's leading financial services companies. Bank of America Corp. has a market cap of $100.98 billion; its shares were traded at around $12.64 with a P/E ratio of 13.42 and P/S ratio of 1.39. The dividend yield of Bank of America Corp. stocks is 0.31%. Bank of America Corp. had an annual average earning growth of 7.5% over the past 10 years.
David Tepper held 47.6 million shares as of March 31, 2009. Since then, the stock grew from $6.82 to $12.62, up 85.3%.
No. 2: SunTrust Banks Inc. (STI, Financial), Weightings: 6.99% - 5,050,000 Shares
SunTrust Banks Inc. is a commercial banking organization. SunTrust Banks Inc. has a market cap of $5.68 billion; its shares were traded at around $16.1 with and P/S ratio of 0.62. The dividend yield of SunTrust Banks Inc. stocks is 2.51%. SunTrust Banks Inc. had an annual average earning growth of 2.3% over the past 10 years.
If David Tepper has not sold since March 31, 2009, his holding is up 37%.
No. 3: Fifth Third Bancorp (FITB, Financial), Weightings: 7.53% - 21,849,728 Shares
Fifth Third Bancorp is a registered financial holding company and a multi-bank holding company. Fifth Third Bancorp has a market cap of $4.01 billion; its shares were traded at around $6.88 with and P/S ratio of 0.47. The dividend yield of Fifth Third Bancorp stocks is 0.58%. Fifth Third Bancorp had an annual average earning growth of 8% over the past 10 years.
From March 31 when the stock closed at $2.92, the stock is more than doubled.
Investing or Speculating
It is rare for an investor to concentrate his position so heavily in one sector. David Tepper's timing couldn't have been better. Does that make him a good investor? I submit to the users of this website to comment.
Whether David Tepper will hold his stakes in Bank of America, Fifth Third Bancorp, and SunTrust Banks Inc. stocks remains to be seen. Even though he claimed he is a value investor, he did not make money by buy and hold. In our opinion, he is more of a trader who turns over his portfolio quite often. With BAC and FITB ran up so much and so fast, even a steadfast value investor would not blame him for taking some profit. Even STI ran up dramatically since we looked at his portfolio on May 31, 2009.
GuruFocus will be updating you on what’s David Tepper’s investment when he reports next month.
Known as one of the country’s most successful hedge-fund managers, David Tepper initially became interested in the stock market as a young boy watching his father trade stocks in his hometown of Pittsburgh. Today, as president and founder of Appaloosa Management, Tepper has earned an international reputation for producing some of the highest returns amongst fund managers on Wall Street. One expert has referred to him as "the best trader in his space."
Tepper was the head trader on the high-yield desk at Goldman Sachs where he worked for eight years. His primary focus was bankruptcies and special situations. He left Goldman in December 1992 and started Appaloosa Management in early 1993. According to the speech he gave in the Business School that bears his name, at least through 2007, David Tepper claimed to be a value investor, looking for long term gain in stocks. We can dispute the merit of his claim and question his definition of “value investor”, but we cannot argue with his success.
Forbes reported in March 2009 that David Tepper, “ Feared prolonged economic slowdown; directed money managers at his Appaloosa Management hedge fund to move billions of dollars out of equities and into cash between June and October of last year.” If that is case, at least he is a good market timer during the stock market crash of 2008.
Still, according to Alpha website, David Tepper’s funds, Appaloosa Investment I and Palomino were each down about 26 percent in 2008. The website stated that David Tepper lost about $450 million in 2008.
David Tepper Returns
GuruFocus Data shows that David Tepper returned in full force, in Financials that is. Data shows that a good 57% of his equity holdings are Financials as of March 31, 2009.
Most of the 1Q09 new purchases go to three banks: Bank of America Corp. ( BAC), Fifth Third Bancorp ( FITB), SunTrust Banks Inc. ( STI)
All three bank stocks are new positions taken in 1Q09. The betting in the banks is paying off. Since March 31, 2008, the equity portfolio of David Tepper is up about 77.4%, thanks largely to the substantial run-up of the banks. Green shoots or not, a gain is a gain. The timely betting on Financials goes a long way in helping David Tepper to recoup his losses last year.
No. 1: Bank of America Corp. (BAC, Financial), Weightings: 38.25% - 47,550,000 Shares
Bank of America Corp. is one of the world's leading financial services companies. Bank of America Corp. has a market cap of $100.98 billion; its shares were traded at around $12.64 with a P/E ratio of 13.42 and P/S ratio of 1.39. The dividend yield of Bank of America Corp. stocks is 0.31%. Bank of America Corp. had an annual average earning growth of 7.5% over the past 10 years.
David Tepper held 47.6 million shares as of March 31, 2009. Since then, the stock grew from $6.82 to $12.62, up 85.3%.
No. 2: SunTrust Banks Inc. (STI, Financial), Weightings: 6.99% - 5,050,000 Shares
SunTrust Banks Inc. is a commercial banking organization. SunTrust Banks Inc. has a market cap of $5.68 billion; its shares were traded at around $16.1 with and P/S ratio of 0.62. The dividend yield of SunTrust Banks Inc. stocks is 2.51%. SunTrust Banks Inc. had an annual average earning growth of 2.3% over the past 10 years.
If David Tepper has not sold since March 31, 2009, his holding is up 37%.
No. 3: Fifth Third Bancorp (FITB, Financial), Weightings: 7.53% - 21,849,728 Shares
Fifth Third Bancorp is a registered financial holding company and a multi-bank holding company. Fifth Third Bancorp has a market cap of $4.01 billion; its shares were traded at around $6.88 with and P/S ratio of 0.47. The dividend yield of Fifth Third Bancorp stocks is 0.58%. Fifth Third Bancorp had an annual average earning growth of 8% over the past 10 years.
From March 31 when the stock closed at $2.92, the stock is more than doubled.
Investing or Speculating
It is rare for an investor to concentrate his position so heavily in one sector. David Tepper's timing couldn't have been better. Does that make him a good investor? I submit to the users of this website to comment.
Whether David Tepper will hold his stakes in Bank of America, Fifth Third Bancorp, and SunTrust Banks Inc. stocks remains to be seen. Even though he claimed he is a value investor, he did not make money by buy and hold. In our opinion, he is more of a trader who turns over his portfolio quite often. With BAC and FITB ran up so much and so fast, even a steadfast value investor would not blame him for taking some profit. Even STI ran up dramatically since we looked at his portfolio on May 31, 2009.
GuruFocus will be updating you on what’s David Tepper’s investment when he reports next month.
