Rumors of the death of hedge funds may have been exaggerated, but with every passing day at least one investing icon calls it quits. And the latest is none other than one of the best performing hedge funders of the 21st century, David Tepper.
According to the WSJ, the Appaloosa billionaire is planning to return money to investors after more than two decades of running his hedge fund, although he hasn't yet made a final decision on the timing. According to the WSJ, 70% of the firm’s $13 billion in capital belongs to Tepper himself, who is planning on converting Appaloosa into a family office.
A spokesman for Appaloosa told the WSJ that the firm hasn’t set an exact time table for the return of all outside money. Appaloosa is among a small number of hedge funds that has regularly returned some investor money over the last decade in an effort to manage their size and returns.
Tepper launched his hedge fund in 1993 after his stint at Goldman, and made huge returns betting initially on credit markets, before branching out into every asset class. He earned billions during the depths of the financial crisis by buying shares in beaten-down banks. Overall, Tepper generated annualized returns of more than 25% since Appaloosa’s start.
As the WSJ adds, "even as a raft of prominent managers have called it quits in recent years, citing markets that don’t make sense and too much competition, Appaloosa has continued to profit. Mr. Tepper has ignored the fervor for big data and factor-driven investing and continued to make calls based on fundamental analysis of companies and the economy."
Yet he also has proven to be one of the few hedge-fund managers capable of shifting strategies without sacrificing profits. He began Appaloosa as a distressed credit fund and over the years transformed into a macro investor making calls on the direction of the economy and an activist investor pushing for change at companies.
The 61-year-old billionaire has made lifestyle changes in recent years. He moved to Florida in 2016, to the consternation of New Jersey lawmakers concerned about the impact on the state’s tax revenues, and moved his firm’s headquarters there, too.
He has also been spending more time on the Carolina Panthers, which he bought last year for an NFL record of about $2.2 billion; he was previously a part owner of the Pittsburgh Steelers. Tepper is now focused on turning around the Panthers and increasing revenues associated with it, said people close to him, for example by improving the stadium and striking lucrative partnerships. He is shown below, in a Panthers hat, sitting next to young, lovely lady at the NBA All-Star Game at Spectrum Center in Charlotte.
As the WSJ notes, Tepper has also expressed interest in bringing a Major League Soccer team to Charlotte, N.C., where the Panthers play their home games.
His planned change to Appaloosa would add him to the list of wealthy investors who are returning client money to focus on managing their own fortunes. Hedge-fund manager Jonathon Jacobson said last year he was making the switch at Highfields Capital Management, as has Blue Ridge capital's John Griffin. One hit hedge fund wonder John Paulson is also said to be converting to a family office.
And since Appaloosa will have to sell a prorata share of its US equity holdings, which according to the latest 13F amounted to $3.5 billion, here is the list of the fund's top 20 holdings.