With David Tepper "BWICs To The Wall", Has The Smart Money Begun "Greatly Rotating" Out Of Risk?

Tyler Durden's picture


No one typifies the bullish euphoria of the last year better than Appaloosa's David Tepper (except perhaps Laszlo Birinyi). It appears, however, that everyone's favorite perma-bull is up to his old tricks again. The manager who infamously opened his mouth about how he couldn't be more "balls to the wall" bullish of US financials - and then proceeded to reduce his positions notably in the quarter following that media appearance - has seemingly done it again. His appearances earlier this month on CNBC and Bloomberg were both full of hubris and arrogance as he encouraged the world to grab financial stocks with both hands and feet. However, as Fox Business' Charlie Gasparino reported yesterday, Tepper's Appaloosa is now seeking bids (to unwind a long position) for $400mm of European bank debt - doesn't seem so balls-to-the-wall bullish to us? With two weeks left to the great unveiling of the Q4 13Fs, we wait anxiously to see just how big Tepper's 'balls at the wall' really were/are.

Via Fox Business Network,

FOX Business Network’s (FBN) Charlie Gasparino reports that Appaloosa Management Founder David Tepper put out for bid $400 million of hybrids for HBOS PLC, Royal Bank of Scotland and Commerzbank. Gasparino goes on to report that this indicates he might be turning bearish on financials due to some headwinds surrounding trouble in Europe.
On the $400 million of hybrid bank securities Appaloosa founder David Tepper put out for bid:

“What happened with Tepper this week, we hear this from sources that are in the bond market, that he went out – this is after he’s been very public that he’s bullish on financials, he likes Citigroup – he went out and put out for bid $400 million of hybrids for three companies, three financial companies – HBOS PLC, that’s the banking arm of Lloyds of London, Royal Bank of Scotland from what we understand, and Commerzbank. Pretty interesting, when you put these out for bid, it’s not like he sold a little here, sold a little there... he put out a bid, everyone knows it was him. He’s doing this just as he’s talking about financials.”

On whether the bid means he’s turning bearish on the financials:

“He may be turning a little bearish... The financials could have some headwinds here when you start talking about Europe, you know European problems starting to creep back... If you are worried about the countries, you have to worry about the banks because the banks, even here, hold some of that, what could be toxic stuff.”

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Sat, 02/02/2013 - 16:51 | 3209519 BattlegroundEur...
BattlegroundEurope2011's picture

Fool me once...



Sat, 02/02/2013 - 16:57 | 3209532 Dr. Engali
Dr. Engali's picture

Speaking of fool me once ...100% mortgage financing is back.


We will never learn.

Sat, 02/02/2013 - 17:03 | 3209547 Bob
Bob's picture

I think the affluent guys qualified for these loans learned their craft well before the GFC and are still riding the same wave. 

Moral hazzard works!!

Sat, 02/02/2013 - 17:18 | 3209574 francis_sawyer
francis_sawyer's picture

Fool me once = "Balls to the Wall"

Fool me twice = "Balls in your mouth"

Sat, 02/02/2013 - 22:17 | 3210175 Trimmed Hedge
Trimmed Hedge's picture

I believe you are referring to "tea-bagging"..?

Sat, 02/02/2013 - 17:24 | 3209580 trav777
trav777's picture

if by 0% down you mean 20% down via pledged collateral then you are correct.

Sat, 02/02/2013 - 17:52 | 3209624 Dr. Engali
Dr. Engali's picture

And the market will always go up too.

Sat, 02/02/2013 - 17:36 | 3209595 socalbeach
socalbeach's picture

Thanks for the link.

Whether or not it's a smart move depends on the price of the asset your're buying, it's yield (or equivalent rent if purchased to live in), and the interest rate you pay.  For example, would you be willing to buy a rental property in a desirable location if you were offered a 2% interest rate, 30 year loan, with the following income and expenses?

rent: $3,500/month,

prop tax: $600/month (limited to 2% per year increase),

insurance: $70/month,

misc expenses: $450/month,

interest expense 1st payment: $1,000/month (based on $600K purchase price, nothing down).


I would.  Other than the loan terms, the numbers are similar to a place I purchased in 2011.

Sat, 02/02/2013 - 18:05 | 3209643 tip e. canoe
tip e. canoe's picture

(limited to 2% per year increase)

where are you finding that?

Sat, 02/02/2013 - 22:43 | 3210217 socalbeach
socalbeach's picture

Prop 13 in CA limits prop tax increases to 2%/year, with the exception of bond measures that can be passed during elections.  In Orange County, which is fiscally conservative, those don't amount to much. 

The Democrats won a super-majority in the CA legislatures last November, so it's possible they will overturn Prop 13 for residential properties. The big government types in CA been trying to do that for decades.

Sun, 02/03/2013 - 09:17 | 3210701 Element
Element's picture

This time is different.

Sat, 02/02/2013 - 20:41 | 3209543 ToNYC
ToNYC's picture

Why wouldn't he stop saying being Bullish as long as he was net Long? Who said it wasn't your balls he was holding and nailing to the walls?

Sat, 02/02/2013 - 18:29 | 3209681 bobthehorse
bobthehorse's picture

I'm too chickenshit to invest.

The sky is falling.

It's a rigged game.

And I possess no insider information.


Sat, 02/02/2013 - 16:52 | 3209522 buzzsaw99
buzzsaw99's picture

methinks the BMPS scandal put the fear of jebus into Tepper.

Sat, 02/02/2013 - 17:31 | 3209601 Cdad
Cdad's picture

Ding!  Thanks to ZH...what is about to happen per European "financial instruments" seems abundantly clear.

Sat, 02/02/2013 - 16:52 | 3209523 IMA5U
IMA5U's picture

of course right winged fox wants the rally to fail



Sat, 02/02/2013 - 17:00 | 3209529 Dr. Engali
Dr. Engali's picture

Wtf does Faux have to do with the fact Tepper is saying one thing and doing another?

Sat, 02/02/2013 - 17:19 | 3209571 booboo
booboo's picture

Just another Hope a Dope with his record stuck. Sometimes the record player needs a swift kick.

Sat, 02/02/2013 - 17:28 | 3209589 Dr. Engali
Dr. Engali's picture

He's been here for 3.5 years and still believes there's a difference between the reds and the blues. Talk about your slow learners.

Sat, 02/02/2013 - 17:39 | 3209610 francis_sawyer
francis_sawyer's picture

Precisely why he is "Made for TV"...

Sat, 02/02/2013 - 18:27 | 3209674 Freddie
Freddie's picture

TV and Hollywood are total shit and probably always have been the CIA's Operation Mockingbird for the elites.  F TV and Hollywood.  If people watch then they enable all of this evil.  Fox and the rest are all the same.

Creepy hedge fund managers deserve their balls in a vice or smashed with a hammer.

The good ones like Hugh Hendry, Ray Dalio, Kyle Bass maybe Chanos and a few pundits like Jim Grant, Jim Rogers, Celente, Marc Faber deserve medals.  The rest deserve a firing squad.

Sat, 02/02/2013 - 17:20 | 3209575 kaiserhoff
kaiserhoff's picture

I think it is mighty white of ZH to notice the other 90% of the investment community for once,

the portion not stuck in the sewers of Jew York or the tyranny of DC.


Sat, 02/02/2013 - 16:56 | 3209528 topspinslicer
topspinslicer's picture

Sounds like he is taking a page out of Cramer's how to manipulate markets and still sleep at night book

Sat, 02/02/2013 - 17:34 | 3209606 W74
W74's picture

Cramer is a lying halfjew. I don't know how they sleep at night either.  Bunch of psychopaths, it's genetic.

Sat, 02/02/2013 - 20:14 | 3209924 ToNYC
ToNYC's picture

You are just jealous and are there to pay retail and nothing more. shalom salaam alaikum white devil.

Sat, 02/02/2013 - 17:02 | 3209540 Motorhead
Motorhead's picture

Where's Dick "Oy Vey" Bove' when you don't need him?

Sat, 02/02/2013 - 17:25 | 3209579 kaiserhoff
kaiserhoff's picture

Hey, Lehman will be just fine, as will Bear.  Enough of you nattering nabobes of negativity.

BERNIE MADOFF IS A GOOD MAN.  (actually said by a client on his dying day)

Sat, 02/02/2013 - 17:04 | 3209545 ekm
ekm's picture

I have said it and I will say it again, over and over and over and over:


People who have 'money in the sidelines' are the ones who own everything and have nobody to sell those to.

Money in the sidelines exist because it's left over after everything is being owned by them. 


No wonder there's nobody to sell the shit to, because they've got all the money printed fresh.


As Seth Klarman said:

If you buy a security to sell it to a greater fool, if there are no greater fools left, then you are the greater fool.

Sat, 02/02/2013 - 17:06 | 3209548 Motorhead
Motorhead's picture

I wonder if the Hunt Brothers learned that lesson when they tried to corner the silver market.

Sat, 02/02/2013 - 17:09 | 3209554 ekm
ekm's picture

Good point.

There's such a thing as a psycopathic threshhold. Once a human being makes the decision to cross that line, she/he will never change.

It's like a lifelong decision to remain psycho, same as a cocaine taker. MFG's Jon Corzine is typical example.

Sat, 02/02/2013 - 17:16 | 3209563 ekm
ekm's picture

"Smart money" is the greater fool. Period.

They've sucked all money from everybody else, hence the only option left is few of them to be erased, same as in 2007-2008.

Sat, 02/02/2013 - 17:49 | 3209618 francis_sawyer
francis_sawyer's picture

Certainly... Seth Klarman... Has zeo "foreskin" in any game... His wisdom [which amounts to ~ DON'T FIGHT THE JOOBUCK PRINTING FED ~ in practice], should be cherished for the ages...

Sat, 02/02/2013 - 18:03 | 3209638 ekm
ekm's picture

All of them are predators.

What matters is that he was one of the few that openly showed how it works in his book Margin of Safety.

Sat, 02/02/2013 - 17:19 | 3209573 Temporalist
Temporalist's picture

If that were true then they wouldn't have had to be prosecuted because they would have naturally failed.  The rules wouldn't have needed to be changed against them, they wouldn't have been a media campaign to slander them for decades, they would have just been able to hold the silver and it would have lost value.  Instead they were made an example of for generations.

Sat, 02/02/2013 - 20:22 | 3209940 ToNYC
ToNYC's picture

I'm a seller of Seth Klarman, looking for the greater fool; as Seth Klarman was never heard to say.

Sat, 02/02/2013 - 20:33 | 3209966 ekm
ekm's picture

Read the book Margin of Safety.

I was quoting verbatim.

Sun, 02/03/2013 - 03:02 | 3210528 TotalCarp
TotalCarp's picture

I dont think its buyable but am retty sure you can find it online in pdf.. Incidentally just started reading it..

Sun, 02/03/2013 - 15:11 | 3211334 ekm
ekm's picture


Sat, 02/02/2013 - 17:14 | 3209560 Yen Cross
Yen Cross's picture

 Smart money is rotating, (right) back into the frying pan!

These boom /bust cycles keep getting closer to the " Event Horizon"  BLACK HOLE>


Sat, 02/02/2013 - 17:17 | 3209569 ekm
ekm's picture

Brilliant metaphor.

Sat, 02/02/2013 - 17:31 | 3209591 Yen Cross
Yen Cross's picture

ekm , I think you have, what many people lack/ 

You are steadfast, and a very " Matriculate"asset.

 /  Long Air Conditioning " Repairmen" ...

Sat, 02/02/2013 - 17:13 | 3209561 LongSoupLine
LongSoupLine's picture

Tepper is a fucking asshole.

I hope that fucker loses everything and ends up in the fucking cold streets where he's raped in the ass by fucking gangs of men on viagra. Fucker.

Sat, 02/02/2013 - 17:29 | 3209594 Yen Cross
Yen Cross's picture

 Keep Kicking " FUCKING ass"!

Sat, 02/02/2013 - 22:22 | 3210186 Trimmed Hedge
Trimmed Hedge's picture

"...raped in the ass by fucking gangs of men on viagra..."


OMG, so HAWT!!

You should totally write homoerotica...

Sat, 02/02/2013 - 17:26 | 3209588 Brokenarrow
Brokenarrow's picture

Look at people that you knew when they were kids. Tepper looks like he would LOVE to take it up the ass. He is still the same: pretending to be something he is not.

Tepper wants to wear black stockings and take it in the rear. WIth his afro....................

Sat, 02/02/2013 - 17:56 | 3209631 shovelhead
shovelhead's picture

Not that theres anything wrong with that.

Sat, 02/02/2013 - 17:54 | 3209625 Yen Cross
Yen Cross's picture

 I have this giant Bank of japan file to dump. I promised 12 hours ago that I would load the file pdf; for Zero hedge.

 Should I download that filE?

Sat, 02/02/2013 - 20:28 | 3209953 ClassicCommodity
ClassicCommodity's picture

Yen, dump it!

Sat, 02/02/2013 - 17:56 | 3209630 Meatballs
Meatballs's picture

Methinks February is going to be very interesting...

Sat, 02/02/2013 - 18:00 | 3209634 4Y_LURKER
4Y_LURKER's picture

I love that picture.  F=MA


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