David Tepper’s Appaloosa Management is officially an activist investor at TerraForm Power (TERP). Tepper reveals a 9.25% stake in TERP and threatens legal actions against TERP and its general partner SunEdison (SUNE).
The fund sent a letter to TerraForm. Now Tepper isn’t a typical activist but is one of the most well known (highest paid) hedge fund managers around. it takes a lot for him to lash out publicly, where this is his first activist campaign in nearly a decade.
Now this isn’t an easy stock to understand, where it’s a SunEdison YieldCo and the financial engineering there is ridiculous. There are intricacies here that supersede the typical MLP structure we see in energy names.
But back to Tepper – the corporate governance at TerraForm is a mess. He may sue TERP and SUNE. He thinks that SUNE is using TERP as a dumpster for poor acquisitions. The legal issues come into play with the Nov. 20th board meeting at TERP — when SUNE replaced management and various board members. Still a dumpster fire here and at SUNE.