David Tepper, founder of Appaloosa Management, was the highest earnings hedge fund manager last year. Tepper spoke at the SALT Conference and gave his thoughts on the markets, philanthropy and more. Below are some very rough notes from the famous hedge fund manager. To see our full SALT Conference coverage click here.

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David Tepper

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David Tepper

Went to Pitt undergrad, Carnegie Mellon for grad school

Worked for Eepublic Steel out of grad school in treasury dept, in Cleveland Ohio

Republic steel was going bankrupt

Took job as junk bond analyst in Boston

First outside hire for Goldman Sachs in a new Junk Bond department

Analyst for 6 months, became a trader, then became head trader of Junk bonds at Goldman

(taking principal risk at the firm)

 

Left the firm in 1992, and started  Appaloosa

called it A bc it was front of the alphabet and got information faxed to him 10-15 minutes faster

Goldman Sachs didnt make David Tepper partner after the third round, so he said forget that

Had 4m saved up, he double 3.5M before starting Appaloosa and then raised $50M

was up 72% in first year… was then worth $20M

The hedge fund has been down 20% 3 times (including the Russian crisis in 1998), and made back high water mark within 6 months every time

 

Advice gotten throughout career

Bob Rubin, don’t even put yourself in a place to look like you insider traded, stay clean

 

I love winning the GAME!  [the investment industry is a game, and most don’t understand, I think, My opinion]

 

Turned down a lot of money over his career, not in it to bring in assets

has given his investors back twice their money, now just playing with the houses money….he can’t lose their money now, was a huge burden off his back

The hedge fund now has $20b and about 33 people working there

 

Where are we now?  Tough market

phrase in office, coördinated complacency (to describe the central bank)

Over-capacity in china

ECB better ease in June, really really far behind the curve!

David Tepper is more worried about deflation, than inflation

He has never lived through it

Europe keeps waiting to ease, doesn’t know how they get away with it

they should have already eased

if the ECB does its thing, we are probably ok, if not then maybe in trouble

They have to do 3 things in order to be effective

I think we are OKaaaay, time to make money, and time to not lose money

Still be long, but have cash now, time not to lose money, he is nervous & its nervous time

Nothing is that interesting right now…16x now is not that attractive
Advice:  Do what you love, find your passion