It’s been a good year for David Tepper. Not only did the 60-year-old Appaloosa hedge fund billionaire win an auction for the Carolina Panthers with his $2.3 billion all-cash bid – a record purchase price for a NFL franchise – but according to Bloomberg, Tepper is also crushing both his hedge fund competition and the broader market, returning 7% YTD through April, outperforming the HFR multistrat index, which is up barely 1% for the period, by ~600% while the S&P was not even green for the year at that point.
This means that in just the first 4 months of the year, Appaloosa has already returned more than half the 13% gross return it delivered in 2017 (and 8% net of the 2 and 25% the fund charges), largely thanks to positions in Micron, Facebook and the debt and equity of distressed casino operator Caesars according to Bloomberg sources. However, unlike in 2018, last year Tepper failed to outperform the S&P’s 19% advance.
As Bloomberg also adds, despite the fund’s stellar performance, its AUM is down to $17BN from $18.3BN at the end of January, although the bulk of the assets, roughly 70%, belong to Tepper and company employees. He has returned at least a billion dollars to investors annually over the past few years, except in 2017.
As we reported earlier this week, while Appaloosa largely kept its book unchanged in the first quarter, the most notable shift was the liquidation of its entire AAPL stake which was sold to Buffett, while the fund added 8MM shares to its Micron holdings, which was the equivalent to $1.85BN at the end of March. The rest of the fund’s top positions were Facebook, Alibaba, Allergan, Altaba and Google, or yet another hedge fund that has gone all in tech and “growth.”
What is curious, is that despite his impressive performance, Tepper recently told an audience in his alma mater that “we may have reached the highs for the year”, largely as a result of rising yields.
“Listen, it’s tough right now. Because historically yields have been fairly low. Actually tonight I’m trying to figure out what the BOJ’s doing because either this meeting or next meeting they might change their policy which would affect our Treasurys and will effect the stock market. So I think as far as the stock market is concerned I think they’re okay. I don’t think it’s great. I think we might’ve reached the highs for the year.
And here is Tepper’s take on how rates will impact stocks:
… a lot of it has to do with interest rates. We’re right on the cusp of breaking out on interest rates at this level around 3%. I think they closed at around 2.98% on the 10-year – actually I know because I just looked. But a lot of people don’t think they’re going to break higher – most people are only saying they’re only going to 3.25%. And I think if they only go to 3.25% for the rest of the year then stocks might be up. But too many people are saying that. And when too many people are saying one thing that’s when I start to get worried. So if we break above that, then stocks might have a problem.
The segment is 5:20 into the clip below.
via RSS https://ift.tt/2L6VL2x Tyler Durden