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Bram de Haas
Bram de Haas
Articles (305)  | Author's Website |

David Tepper Takes His S&P 500 Exposure Down to 25% Because of Tariffs

The guru is shifting from bullish to very cautious

September 13, 2018 | About:

David Tepper (Trades, Portfolio), the founder of Appaloosa Management, has earned a reputation for generating some of the best returns among hedge fund managers. He appeared on CNBC on Thursday to discuss his market views.

For good measure, I've considered him to be on the bullish side over the past several years. That has changed, though his position isn't extremely bearish either.

Tepper doesn't want to play the innings game, but believes the tightening cycle is starting. He is about 25% exposed to a S&P 500 (SPY). The two reasons he gives are:

  1. A fairly valued market.
  2. Fear of tariffs.

If tariffs are implemented, the Chinese yuan could go up to 8:1 to the U.S. dollar.

He doesn't know how much is discounted in the market. If the trade war disappears, he doesn't expect the market to go up by 10%.

If the dollar starts appreciating against the euro and the yuan, earnings for S&P 500 companies (which derive a majority of earnings from overseas) will go down. Tepper strongly believes the market doesn't discount that.

He is a little bit surprised about the strength of the market lately. Tepper believes protecting the intellectual property of U.S. tech companies is a very serious matter. Sometimes you have to take a little pain to protect what you have.

Tepper may have only 25% exposure, but the bets he has are aggressive. His top five positons as tracked by GuruFocus are:

  1. Micron (NASDAQ:MU)
  2. Facebook (NASDAQ:FB)
  3. Allergan (NYSE:AGN)
  4. Alibaba (NYSE:BABA)
  5. Altaba (AABA)

Disclsoure: Author is long AGN. 

About the author:

Bram de Haas
Bram de Haas is the managing editor of The Black Swan Portfolio.

Visit Bram de Haas's Website


Rating: 4.5/5 (2 votes)

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