Archive for the ‘Investors’ Category

Tepper Nabs BofA’s Star Banker, Kaplan!

Wednesday, March 2nd, 2011

March 2, 2011: Tepper, the legendary founder of Appaloosa, the man who bought BAC at $3.00 and made $4 billion last year just outdid himself. One of Tepper’s biggest positions is Bank of America, and he just hired their head of mergers & acquisitions, Jeff Kaplan (we can only hope that their is no insider information exchanged, so that Tepper can stay in business). I lost some faith in the HF industry when Shumway and Level Global closed over the past two weeks. BAC has its hands tied, as the firm’s only bidder in the depths of the recession now seems to be its enemy…nice knowing ya Mr. Kaplan. The Bernanke put has made Tepper exceedingly jolly and audacious, as one can see clearly in the photograph above.

Bank of America Corp., the biggest U.S. lender by assets, said Steven Baronoff will assume Jeff Kaplan’s duties leading mergers and acquisitions.

Kaplan is leaving to join hedge fund Appaloosa Management LP, the Charlotte, North Carolina-based bank said today in a memo obtained by Bloomberg. Baronoff, chairman of global M&A, has advised on more than $1 trillion of transactions, including Procter & Gamble Co.’s purchase of Gillette, according to the memo from Thomas Montag, president of global banking and markets, and Michael Rubinoff and Purna Saggurti, co-heads of global investment banking.

Baronoff “will continue to serve as our most senior adviser to deal teams and clients globally,” according to the memo. “We thank Jeff for his dedication and leadership and look forward to working with him in the future.”

Kaplan joins Appaloosa, a Bank of America client, as chief operating officer, according to the memo. As M&A chief, he worked on deals including advising Marvel Entertainment Inc., led by Isaac Perlmutter, on its $4 billion sale to Walt Disney Co. in 2009.

John Yiannacopoulos, a Bank of America spokesman, confirmed the contents of the memo. The change was reported earlier by the Wall Street Journal.

– With assistance from Zachary Mider in New York. Editors: Dan Reichl, David Scheer

To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net; Dakin Campbell in San Francisco at dcampbell27@bloomberg.net.

Wing Chau Sues Author of the Big Short!

Tuesday, March 1st, 2011

People have no SHAME.  Wing Chau, president of Harding Advisory is suing Michael Lewis, the author of The Big Short for “unfairly casting him as a villain.”  Listen Wing, you cheated investors and blatantly ignored your fiduciary responsibility.  Give it a break.

In his book, Lewis writes about a handful of Wall Street outsiders who realized the subprime mortgage business was a house of cards and found a way to bet against it, making billions for themselves.  He also discusses the perpetrators and poor underwriters that were the cause of the subprime collapse:

“Author Michael Lewis was sued by Wing Chau, president and principal of Harding Advisory LLC, who accused the writer of defaming him in his 2010 book “The Big Short: Inside the Doomsday Machine.”

Chau, a manager of collateralized debt obligations, according to a complaint filed Feb. 25 in NY federal court, claims the book unfairly casts him as one of the “villains” responsible for the 2008 financial collapse.

The book “depicts Mr. Chau as someone who ignored his professional responsibilities, made misrepresentations to investors, charged money for work that was not performed, had no stake in the CDOs he managed, was incompetent or reckless in carrying out his responsibilities, and violated his fiduciary duties by putting the interests of ‘Wall Street bond trading desks’ above those of his investors,” according to the complaint.

Also named in the suit, which seeks unspecified damages, are the book’s publisher, W.W. Norton and Steven Eisman, managing director of FrontPoint Partners LLC, whom Chau describes in the complaint as “one of the principal sources Lewis relied on in writing ‘The Big Short.’”

Lewis, a columnist for Bloomberg News, didn’t immediately respond to an e-mail seeking comment on the suit. Norton spokeswoman Elizabeth Riley had no immediate comment

The case is Chau v. Lewis, 11-cv-1333, U.S. District Court, Southern District of (Manhattan).”

To contact the reporter on this story: Bob Van Voris in New York.

Complaint Against Michael Lewis

Warren Buffet BH Annual Shareholder Letter – 2010

Sunday, February 27th, 2011

Warren is ready to start making acquisitions.  Berkshire Hathaway is now earning nearly $1 billion per month in net income and has nearly $38 billion in cash reserves, the largest reserve hoard since 2007.  WB has been known to use his cash cow insurance business to fund acquisitions.  Investment income from his insurance operations alone was $5.2 billion in 2010, and earnings were up 61% from 2009.  It is hard to imagine how Mr. Buffet started his career by purchasing a couple pinball machines.  His company’s cash reserves now rival the gold reserves of many developing nations.  BH’s annual letter to shareholders was released on 2/26/2011 and bodes well for the U.S. economy.  Since 1965, Berkshire has averaged annual returns of 20.2%, while the S&P has returned 9.4%, including dividends.

Warren Buffett 2010 Berkshire Hathaway Letter

Warren Buffett, in his widely followed annual letter to shareholders, said he is prepared for “more major acquisitions,” as the conglomerate on Saturday reported a 61% jump in 2010 earnings and a growing cash hoard.

“We’re prepared. Our elephant gun has been reloaded, and my trigger finger is itchy,” the billionaire investor said in the letter accompanying Berkshire’s annual report.

The Omaha, Neb., company’s 2010 net income of $13 billion received a big boost from railroad operator Burlington Northern Santa Fe, which Berkshire acquired for roughly $27 billion last February. In his letter, Mr. Buffett called the deal “the highlight of 2010″ and said it is working out “even better” than he had expected, The railroad business generated $4.5 billion in operating earnings last year and $2.5 billion in net earnings, up about 40% from 2009.

While Berkshire has spent tens of billions of dollars on capital-intensive businesses like railroads and utility operators in recent years, its other businesses, such as insurance, are still generating large amounts of cash for Mr. Buffett to invest in financial assets and to acquire more businesses. At the end of 2010, Berkshire’s pile of cash and cash equivalents stood at $38 billion, the highest year-end amount since 2007. Berkshire’s businesses, Mr. Buffett noted, are now earning about $1 billion a month.

As Berkshire tries to keep growing from an ever-expanding base, Mr. Buffett has to find more avenues to invest to achieve his long-stated goal of increasing the company’s value faster than the rate of growth in the Standard & Poor’s 500-stock index.

WSJ’s Jamie Heller and Erik Holm discuss the implications of the newly released letter to Berkshire Hathaway shareholders from billionaire investor Warren Buffett.

Berkshire’s book value, a measure of assets minus liabilities that is a rough proxy for the company’s actual, or “intrinsic,” value, grew 13% in 2010 to $95,453 per share, versus last year’s 15.1% total return in the S&P 500. It was the second year in a row, and only the eighth time in Mr. Buffett’s 46 years of running Berkshire, that the company’s book value change didn’t beat the index, whose returns include dividends. Berkshire is now a component of that index following last year’s B-share stock split and purchase of Burlington Northern.

Mr. Buffett repeated a refrain from past years, stating that Berkshire’s future performance is unlikely to replicate its past. Noting the company’s “now only satisfactory” performance against the S&P in recent years, Mr. Buffett wrote: “The bountiful years, we want to emphasize, will never return. The huge sums of capital we currently manage eliminate any chance of exceptional performance.”

Berkshire’s Annual Report

Mr. Buffett said if Berkshire over time outperforms the market, as shareholders should expect from the company, it will likely be from producing better relative results in bad years for the stock market while suffering poorer results in stronger years.

Shareholders last year weren’t disappointed. Berkshire’s Class A shares, which don’t pay dividends, gained 21% in 2010, besting the S&P and giving the company a market value of roughly $200 billion at year end. The shares are up nearly 6% this year, closing at $127,550 on Friday.

Berkshire’s book value, which grew $26.2 billion in 2010, was boosted by the continuing recovery of stocks in Berkshire’s giant investment portfolio. Wells Fargo & Co. and Coca-Cola Co., Berkshire’s largest equity positions, each rose 15% last year, and each holding is now valued at more than $11 billion.

Stocks and Burlington Northern weren’t the only part of the portfolio that delivered.

A host of Berkshire-owned businesses that had suffered from declining sales and shrinking profits amid the recession now appear to be recovering. Mr. Buffett heralded improvements at units including Fruit of the Loom Inc., Israel-based toolmaker Iscar Ltd. and electronic-components distributor TTI Inc.

Net earnings from Berkshire’s manufacturing, service and retailing operations more than doubled from a year earlier to $2.5 billion in 2010 as the businesses rode the recovering economy. The company’s annual report said it anticipates that “general economic conditions will continue to gradually improve, albeit unevenly, over time.”

Mr. Buffett said an “overwhelming” part of the future investments of Berkshire’s businesses would be in the U.S. Of $8 billion in capital spending slated for 2011, which his letter called a record amount, Berkshire will spend all of the $2 billion increase from last year in the U.S. He said the U.S. offers “an abundance” of opportunity.

Berkshire’s insurance units give Mr. Buffett money to invest until the premiums collected are needed to pay claims years in the future. Mr. Buffett calls these funds “float,” and he reported Saturday that the pool of funds swelled to about $66 billion from $63 billion a year earlier. Investment income from the insurance operations was about $5.2 billion, compared with $5.5 billion in 2009.

In the letter, Mr. Buffett discussed what he and Berkshire Vice Chairman Charlie Munger would regard as a “normal year” for Berkshire. That would be one with a general business climate better than last year’s, but weaker than 2005 or 2006, and one without a large catastrophic event that could trigger large payouts from its insurance business. In such a year, Berkshire’s assets could expect to earn about $17 billion in pretax and $12 billion in after-tax earnings, excluding capital gains or losses, he said.

Mr. Buffett, who turned 80 years old last August, also touched on succession planning in his letter. Besides being Berkshire’s chief executive and chairman, Mr. Buffett is also its chief investment officer with responsibility for the company’s investment portfolio of more than $150 billion in cash, stocks, bonds and other assets. He has said that when he dies, his job at the helm of Berkshire will be split into three, with a separate chairman and chief executive, and one or more chief investment officers.

Berkshire recently hired former hedge-fund manager Todd Combs as an investment manager following a lengthy search for candidates that could potentially step into Mr. Buffett’s role as Berkshire’s chief investment officer. Many money managers had good investing records recently, but Berkshire has been looking for individuals who have a deep understanding and sensitivity to risk and can anticipate the effect of events that have never occurred, Mr. Buffett wrote.

“When Charlie and I met Todd Combs, we knew he fit our requirements,” Mr. Buffett noted. He said the 40-year-old would initially manage funds in the range of $1 billion to $3 billion, an amount that can be reset annually. While Mr. Combs’s focus will be on stocks, he isn’t restricted to that type of investment, Mr. Buffett noted.

The search for competent money managers isn’t over. Mr. Buffett said Berkshire may, over time, add one or two investment managers “if we find the right individuals,” and the managers’ compensation will be tied to their performance.

As in previous years, Mr. Buffett devoted portions of his annual letter to praising the managers of Berkshire’s operating units, including some individuals that company watchers believe are candidates for the Berskhire CEO job.

Mr. Buffett wrote that he “can’t overstate the breadth and importance” of achievements by David Sokol, chairman of utility operator MidAmerican Energy Co. and chief executive of NetJets Inc., who turned the fractional jet ownership business around from a loss.

He noted that Tony Nicely, who runs auto insurer Geico, increased its market share to 8.8% from 2% when he joined the company in 1993, adding he owes Mr. Nicely a huge debt. And Ajit Jain, head of Berkshire Hathaway’s highly profitable reinsurance business, “has added a great many billions of dollars to the value of Berkshire. Even kryptonite bounces off Ajit,” Mr. Buffett quipped.

Mr. Buffett made it clear he has no plans to relinquish any of his jobs. Referring to the investment portfolio, he wrote: “As long as I am CEO, I will continue to manage the great majority of Berkshire’s holdings, both bonds and equities.”

He said that when he and Mr. Munger, 87, are no longer around, Berkshire’s investment managers will have responsibility for the entire portfolio in a manner then set by Berkshire’s CEO and board of directors. The board, he added, “will make the call on any major acquisition.”

Paulson Proves He is Not “One Hit Wonder,” Pulls in $1.25 billion for 2010

Sunday, January 2nd, 2011

 

After being bashed by many hedge fund managers as a “one hit wonder,” Paulson closed well in 2010, putting another strong year under his belt.  The Paulson Advantage Fund was up 14% at the end of 2010 (after being down more than 10% earlier).  His largest stakes were in Hartford Financial Services, MGM, and Boston Scientific.  The Paulson Gold Fund also performed well, given the runup in physical commodities this year.  After outperforming many of his competitors, it is rumored that the hedge fund manager will earn $1.25 billion for himself this year.  It is also interesting to see the divergence in HF manager earnings in the U.S. versus the U.K…

According to Daily News UK, “multi-billionaire US hedge fund manager John Paulson, who pulled off one of the biggest coups in Wall Street history when he made £2.3bn by betting against the sub-prime housing market, is showing the Midas touch again writes Edward Helmore from New York. 

Initial reports suggest his firm, Paulson & Co, has made returns of nearly treble the industry average of 7 per cent in 2010, giving him a personal gain estimated at more than £800mm ($1.25 billion). 

That would eclipse even the biggest earners on the UK hedge fund scene, based in London’s swish Mayfair district.

Colm O’Shea of fund group Comac is reported to have made nearly £10mm last year as did Jonathan Ruffer, of the eponymous investment company. 

Crispin Odey, founder of Odey Asset Management took home £36.4mm. ”

According to Dealbook, “two years after Mr. Paulson pulled off one of the greatest trades in Wall Street history, with a winning bet against the overheated mortgage market, he has managed to salvage a poor year for his giant hedge fund with a remarkable come-from-behind showing.

Defying those who said his subprime success was an anomaly, Mr. Paulson appears to have scored big on bets he made on companies that would benefit from an economic rebound.

In less than three months, his flagship fund, the Paulson Advantage Fund, has turned a double-digit loss into a double-digit gain. At mid-December, the fund, which was worth $9 billion at the start of the year, was up about 14 percent, according to one investor in the fund who provided confidential figures on the condition of anonymity.

It is a remarkable turnabout for Mr. Paulson, whose winning gamble against the housing market plucked him from obscurity and transformed him into one of the most celebrated money managers in the business.

What precisely propelled the sharp rebound in Mr. Paulson’s hedge fund is unclear. A spokesman for Paulson & Company declined to comment, and regulatory filings of significant changes made to Mr. Paulson’s funds typically lag behind by several weeks.

But it is clear that several of Mr. Paulson’s largest stakes — in Hartford Financial Services, MGM Resorts and Boston Scientific — went on a tear in the final quarter of the year, with gains of 16 percent, 30 percent and 26 percent, respectively.

“Several of his general investment themes this year came to fruition,” the investor in the Paulson Advantage Fund said.

Mr. Paulson stands out in what may go down as a lukewarm year for many hedge fund managers. The average return for funds through the end of November was 7.1 percent after fees, according to a composite index tracked by Hedge Fund Research of Chicago. Investors would have done better buying a low-cost mutual fund that tracks the Standard & Poor’s 500-stock index, which rose 7.8 percent during that period.

With volatile markets creating uncertainty for hedge fund managers this year, some investors are surprised that these funds did even that well. But they expect the funds to continue to attract money from investors, particularly state pension funds seeking higher returns to offset their budget shortfalls.

“When investors look back at the year they’re going to be pretty happy,” said David T. Shukis, a managing director of hedge fund research and consulting at Cambridge Associates, which oversees $26 billion in hedge fund assets for clients.

But the lackluster performance has other people wondering: are hedge funds worthwhile? The high fees and muted returns — and a long-running federal investigation into insider trading in the industry — has cast a cloud over a business that long defined Wall Street wealth.

“A client told me the other day that paying these ridiculous fees for single-digit returns, then worrying about these investigations — it’s just not worth it,” said Bradley H. Alford, chief investment officer at Alpha Capital Management, which invests in hedge funds. “A lot of these things you can sweep under the rug when there are double-digit returns, but in this environment it’s tougher.”

This year, bets by hedge fund managers were whipsawed by the stock market “flash crash” in May; the European debt crisis; frustration with the Obama administration over what many in the business viewed as anti-Wall Street rhetoric; and the Federal Reserve’s unusual strategy of buying bonds in the open market to hold down interest rates.

“It was an interesting year where you had to have a couple of gut checks,” said David Tepper, founder of Appaloosa Management, whose Palomino fund, which invests largely in distressed debt, was up nearly 21 percent at the end of October, according to data from HSBC Private Bank.

“If you had those gut checks, looked around and made the right decisions, you could make some money,” Mr. Tepper added.

There are still many hurdles for the industry to clear, including the insider trading investigation, lingering difficulty in raising money, and the liquidity demands from investors still fuming over lockups in 2008 that denied them access to their cash.

Some hedge fund notables will probably remember 2010 as a year they would like to write off. For instance, Harbinger Capital, run by Philip A. Falcone, was down 13.8 percent at the end of November, according to HSBC’s data.

But the Third Point Offshore fund, run by Dan Loeb, was up 25 percent for the year through November after it made successful bets on one of Europe’s largest media operators, ProSieben, and Anadarko Petroleum, according to a report obtained from an investor in the fund.

Other big names also fared well. SAC Capital Advisors, run by Steven A. Cohen, was up about 13 percent in its flagship fund, one of his investors said.

A handful of other usual suspects turned out solid performances this year too, according to investors in their funds: David Einhorn notched a 10.5 percent return at his Greenlight Capital hedge fund through November, raising the fund’s total to $6.8 billion.

And after two consecutive years of losses, James Simons, the seer of quantitative hedge funds, was up 17 percent in his two public Renaissance funds, which now collectively manage $7 billion.

The figures reflect performance after fees through November, and do not take into account the strong market rally in the final month of the year, some investors noted.

For many, being in the right sectors of the market — distressed debt and emerging markets, for instance — paid off handsomely.

“If you look at how some of the distressed managers performed, you’re seeing some really good returns among a number of funds,” said David Bailin, global head of managed investments at Citi Private Bank.

Bets on distressed debt produced a return of more than 19 percent as of the end of October for the Monarch Debt Recovery Fund, overseen by a pair of former Lazard managers. Similarly, Pershing Square, a fund run by William A. Ackman, was up 27 percent after fees through the end of November.

Mr. Ackman’s big win was a bet on the debt of General Growth Properties, a developer that emerged from bankruptcy last month.

It was a bumpy year for Mr. Paulson who, besides making a huge bet on gold — which rose 30 percent — also took large stakes in several companies he believed would benefit from a sharp recovery in the economy, including banking and financial services companies.

But as the economic recovery sputtered along, Mr. Paulson’s portfolio sank, prompting some critics to claim that his funds had become too big to manage. Some of Mr. Paulson’s investors asked for their money back around midyear.

At one point this summer, in fact, other hedge fund managers were selling short stocks Mr. Paulson held in his funds, betting that redemption requests would flood in and that he would be forced to sell down some of his big positions, according to a hedge fund trader at another firm who declined to be named for fear of damaging business relationships. He said investors were making similar bets against stocks held by Mr. Falcone’s Harbinger fund.

As recently as the end of September, Mr. Paulson’s flagship Advantage Plus fund was down 11 percent. As of last week, the fund was up more than 14 percent for the year. (His clients are mostly institutions that invest a minimum of $10 million in the fund.)

Patience paid off for Mr. Paulson as many bets he made late last year and early this year finally shot higher in the last quarter.

This year, Mr. Paulson bought 43 million shares of the gambling company MGM, whose shares have soared more than 30 percent since the end of September. A bet of 40 million shares in the cable giant Comcast has risen 22 percent this quarter.

Shares of Boston Scientific, of which Mr. Paulson owns 80 million shares, have skyrocketed 26 percent, and his 44 million shares of Hartford Financial Services climbed 16 percent in the quarter.

One of Mr. Paulson’s newer positions, a stake in Anadarko Petroleum, moved up 20 percent in the quarter.

With the last-minute rally, Mr. Paulson saved himself from being the headliner among flat funds this year. Most were not so fortunate, with many hedging against their stakes late in the year, expecting that stocks would end the year down. That move, some say, probably limited their gains.

“Psychology is such a fragile thing,” said William C. Crerend, the chief executive of EACM Advisors, which oversees a $3.6 billion fund for Bank of New York Mellon.”

David Tepper Personally Earns $4 Billion for 2009 Performance

Sunday, December 26th, 2010

We thank Dan for his contribution to Leverage Academy, LLC and for writing this biography on David Tepper, of Appaloosa, who made $4 billion for himself last year.

David Tepper grew up in a middle class neighborhood in Pittsburgh, PA. He became interested in the stock market after observing his dad, an accountant, trade stocks during the day.  Following high school, he enrolled in the University of Pittsburgh, where he excelled. After Tepper graduated with a degree in economics, he found a job with Equibank as a credit analyst. He quickly became bored with the role and enrolled in the MBA program at Carnegie Mellon’s School of Business, now named after him. [1] Tepper’s experience at Carnegie Mellon helped him learn options theory at a time when there were no textbooks written on the subject. Kenn Dunn, the Dean of school of the school himself taught these option courses.[2]

After graduating, Tepper worked in the Treasury division at Republic Steel, once the third largest steel manufacturer in the U.S.  Soon after, Tepper moved onto Keystone Mutual Funds, and finally to Goldman Sachs.  At Goldman, Tepper focused on his original role as a credit analyst.  However, six months later, he became the head trader on the high yield bond desk!  Despite his successes, Tepper was not promoted to partner due to his disregard for office politics.  After eight years at Goldman, he left and started Appaloosa Management in 1992 with Jack Walton, another Goldman Sachs trader.

With his background in bankruptcies and special situations at Goldman, Tepper applied his skills and experience at the new hedge fund, and it worked out tremendously for him. Tepper is categorized as a distressed debt investor, but he really analyzes and invests in the entire capital structure of distressed companies, from senior secured debt to sub-debt and post-bankruptcy equity. His fund has averaged a 30% average return since 1993!  While that number is particularly high, Appaloosa has fairly volatile historical returns.  In 2008, Tepper’s fund was down around 25% for the year. For the investor that stuck with him, this certainly paid off with a 120% return after fees in 2009. [3] Tepper shies away from the typical glitz and glamour of the ostentatious hedge fund industry. Appaloosa is not based in New York, but in a small office in Chatham, NJ. It is only about 15 minutes from his house so he can spend more time with his family. The firm manages around $12 billion.

Tepper’s astronomical returns resulted from huge bets on the banking industry, specifically Bank of America (BAC) and Citibank (C). He bought BAC around $3.72 and Citi near $0.79. At year’s end, BAC ended at $15.06, a 305% return, and Citi ended at $3.31, a 319% return.  Appaloosa also has invested in other financial companies such as Wells Fargo (WFC), Suntrust (STI), and Royal Bank of Scotland (RBS). Other companies Tepper has investments in are Rite Aid (RAD) , Office Depot (ODP), Good Year Tire and Rubber (GT), OfficeMax (OMX), and Microsoft (MSFT).  He believes that valuations on stocks and bonds in the financial industry remain favorable, and he is now investing in commercial real estate, a place where many analysts expect huge losses.[4]

Tepper’s investment strategy involves finding value in these distressed companies and betting big. He is not very diversified in his holdings compared to most hedge funds. Investing in these distressed companies can be a very lonely business. David Tepper stated about his recent purchases of BAC and Citi, “I felt like I was alone. No one was even bidding.” While some don’t like being alone, Tepper’s contrarian approach helped him scoop up these companies at bargain prices. Tepper reminds himself that he needs a contrarian attitude every day when he walks into his office and sees a pair of brass balls on his desk, literally. “Mr. Tepper keeps a brass replica of a pair of testicles in a prominent spot on his desk, a present from former employees. He rubs the gift for luck during the trading day to get a laugh out of colleagues.”[5] While humorous, these brass balls represent his strategy of taking concentrated bets on these companies that the market does not see any value in.

David Tepper has not been without controversy. In his dealings with Delphi, an auto parts maker, his hedge fund along with other investors backed out of their exit financing agreement after Delphi sought additional funding from General Motors. His hedge fund believed accepting money from an automaker would hurt Delphi’s ability to win contracts with other automakers. The hedge fund also claimed that this funding arrangement broke their financing agreement. Delphi, in turn sued, declaring that the issue was a “story of betrayal and mistrust.” [6] It has since gone into Chapter 11 reorganization.

While most hedge fund managers who have made $4 billion in a year during one of the worst recessions since the 1930s would face scrutiny from the press, public, and government, Tepper has largely gone unscathed due to the lack of glitz and glamour of his lifestyle. Tepper lives in a New Jersey suburb in the same house that he bought in the early 1990s and coaches his kids’ sports teams. He is a family man is proud of raising three good children. He says, “It was much easier when they were younger. It’s harder now when they open the paper and see how much money I make.”[7]

Last year, Tepper told the business school magazine at Carnegie Mellon that money should be a secondary goal, while living an upstanding life and pursuing what you enjoy should be the top priority.[8] Tepper does not forget about his roots either. He regularly goes to Pittsburgh to visit his alma mater and to watch the Pittsburgh Steelers (of which he is now a part owner).  He also donates money to food pantries and other charities around Pittsburgh.[9] Tepper comes to Carnegie Mellon frequently to talk to students about what needs to be improved at the school. Students describe him as down to earth, friendly, and very candid. While he has been an extremely successful hedge fund manager, he does not lead an extravagant lifestyle and continues to deliver excellent results to investors. His philosophy is very simple: if you treat people right, run your business right, and run your life right, you will create a sustainable business.


[1] http://web.tepper.cmu.edu/tepper/about.aspx

[2] http://www.americanwaymag.com/carnegie-mellon-appaloosa-management-david-a-tepper-school-of-business-coo-and-president

[3] http://seekingalpha.com/article/179565-2009-s-billion-dollar-man-david-tepper

[4] ibid

[5] http://nymag.com/daily/intel/2009/12/david_tepper_made_7_billion_do.html

[6] http://dealbook.blogs.nytimes.com/2009/07/09/appaloosa-and-icahn-said-to-mull-bids-for-delphi/#more-85819

[7] http://www.tepper.cmu.edu/news-multimedia/tepper-stories/david-tepper/index.aspx

[8] http://www.independent.co.uk/news/world/americas/25bn-pay-packet-for-fund-manager-1847227.html

[9] http://www.pittsburghlive.com/x/pittsburghtrib/business/s_658849.html

2010 Top 10 Highest Earning Hedge Fund Managers
Rank Name Firm Name 2009 Earnings
1 David Tepper Appaloosa Management $4 billion
2 George Soros Soros Fund Management $3.3 billion
3 James Simons Renaissance Technologies $2.5 billion
4 John Paulson Paulson & Co. $2.3 billion
5 Steve Cohen SAC Capital Advisors $1.4 billion
6 Carl Icahn Icahn Capital $1.3 billion
7 Edward Lampert ESL Investments $1.3 billion
8 Kenneth Griffin Citadel Investment Group $900 million
9 John Arnold Centaurus Advisors $900 million
10 Philip Falcone Harbinger Capital Partners $825 million

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Check out our intensive investment banking, private equity, and sales & trading courses! The discount code Merger34299 will be activated until April 15, 2011. Questions? Feel free to e-mail thomas.r[at]leverageacademy.com with your inquiries or call our corporate line.