12/9/2017 David Tepper Bets on Washington Policy Moves - The New York Times

For Tepper, Washington Is an Investment

Guide
By Anita Raghavan November 9, 2010 10:36 am

The hedge fund manager David Tepper has done well again by betting on the
moves of Washington.

Mr. Tepper, who runs Appaloosa Management, a $14 billion hedge fund in Short
Hills, N.J., told CNBC in late September that the Federal Reserves willingness to
intervene in the market with quantitative easing meant that most investments
except for Treasury bonds would do well.

At the time, Mr. Tepper told CNBC that his hedge fund had slightly increased its
investments in stocks.

Judging by his funds results for October, Mr. Tepper has been riding the stock
market rally, which took off last week after the Federal Reserve announced plans to
pump $600 billion into the economy through the purchase of Treasury bonds.

Mr. Teppers flagship fund, Appaloosa Investment, had a return, after fees, of
5.10 percent last month, which brought its return for the year to 20.90 percent as of
the end of October, according to the monthly results released by the fund to its
investors. His offshore fund, Palomino, returned 5.07 percent after fees last month
for a 20.98 percent increase for the year as of the end of October. And his
Thoroughbred fund had a net return of 3.07 percent in October and 18.23 percent
for year.

By comparison, the Standard & Poors 500-stock index rose about 3.7 percent in
October; it is up 9.7 percent for the year.

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12/9/2017 David Tepper Bets on Washington Policy Moves - The New York Times

Despite an under emphasis in equities through most of the third quarter,

performance was good, according to an investor letter dated Oct. 28 from the
Palomino fund. The letter said that towards the end of the quarter, particularly after
the Federal Reserve statement, we became more constructive on equities.

The letter noted that the fund was more bullish in general but was monitoring
its positions.

In recent years, Mr. Tepper has done well by betting that the government would
follow through with its stated moves. For instance, he told CNBC that he bought
bank stocks in 2009 because the federal government published its plan to prop up
the financial sector after the credit crunch. (His fund produced a whopping 132
percent return last year, largely because of the bet.)

It was easy, Mr. Tepper said in the interview. The government told you what
they were going to do.

Similarly, in recent months, he has banked on statements from the Federal

Reserve that it was prepared to add more fuel to fire the economic recovery. More
than a month before it introduced plans to buy bonds, the Fed gave the public a first
clue to its thinking. After a meeting in late September, the Fed released a statement
saying the Federal Open Market Committee was prepared to provide additional
accommodation if needed to support the economic recovery.

Then, a few weeks later, when the minutes of the Fed meeting were released,
more evidence emerged that the central bank was likely to act sooner rather than
later. The minutes revealed that Fed members generally sensed accommodation
might be needed before long.

Mr. Teppers recent move into stocks is notable because Appaloosa has been
known for investing in distressed securities, particularly bonds. That is not
surprising given that Mr. Tepper got his start in life trading junk bonds at Goldman
Sachs & Company.

Appaloosa Investor Letter

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