Appaloosa Management, a hedge fund run by David Tepper, plans to return between 10% and 20% of investor assets by the end of 2014, according to a person familiar with the situation, as first reported by Svea Herbst-Bayliss and Sam Forgione of Reuters.
The latest move comes as the hedge fund is dealing with tough market conditions and losing money in October.
Appaloosa return could top $4 billion
David Tepper, head of the $20 billion hedge fund Appaloosa Management, has been facing tough market conditions with the fund down 6% in October, and down around 2.3% for first 10 months of 2014. The hedge fund earned $3.5 billion in 2013 to rank as the top fund in the hedge fund industry. However, this year Tepper acknowledged making some bad calls.
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At the annual SkyBridge Alternatives Conference in May, Tepper admitted that he was “nervous” about the stock market but that this was not the time to sell. He said: “I’m not saying go short, just don’t be too friggin’ long”.
However, the benchmark S&P 500 stock index has gained over 9% since then.
Appaloosa returned $10 billion through 2013
As reported by ValueWalk, last year David Tepper’s hedge fund announced its intention to distribute $1.5 to $2 billion back to investors. The hedge fund has tried to maintain assets in a range that it deems fit for optimal management. With its $2 billion returned to clients last year, Appaloosa has so far returned $10 billion to investors since its inception in 1993.
Last year, David Tepper earned a greater than 40% gross return on his flagship fund. In fact, Tepper was last year’s top-earning hedge fund manager.
Tepper’s Appaloosa Management currently manages nearly $20 billion in assets, about the same as at the end of 2013. The flagship Palomino Fund is down over 2.3% year to date through the end of October. As of September 30, the hedge fund’s top holdings include General Motors Company (NYSE:GM), Citigroup Inc. (NYSE:C), Priceline Group Inc (NASDAQ:PCLN).
As revealed in its latest 13F filing, Appaloosa Management recently bought NXP Semiconductors NV (NASDAQ:NXPI), Lorillard Inc. (NYSE:LO) and Alibaba Group Holding Ltd (NYSE:BABA).