A Presentation By David Tepper To Undergraduate Business Students At Carnegie Mellon University
H/T Forgot who
I think you all know who David Tepper is. He’s of course the benefactor of our school and what you probably don’t know and may not know, is that he grew up in Pittsburgh and went to Peabody High School. He then went to the University of Pittsburgh for his undergraduate degree, worked for a year or so and then came back here and got his MBA and graduated with his MBA in 1982. He was one of my students back then.
You know, everybody always claims and attaches themselves to anybody that’s successful, so I’m claiming that a lot of his success must have been due to those courses he took from me, because he took a number of them (laughter). So anyway, it’s great to have David here. Very much appreciate you coming in especially to do this today and I know the students will appreciate it as well. Now, this is just kind of an open, free forum, an opportunity for you to ask questions and hear answers from David Tepper. He does not have an hour’s worth of material that he’d prefer to talk about, because he wanted to give you lots of time to ask questions. So do make sure that you ask questions. Welcome, David.
Thank you. I had a great time when I was a grad student here at Carnegie Mellon. And one of the reasons was Ken and one of the reasons was this place, being as small as it is, as intimate as it is, as friendly as it is. For me, this place was, in a way, almost life changing. I had a great time here and it really gave me the education I needed. It kind of filled a gap for me, moved me to the next level. My grad school class was 120, I think. Your classes are still very small in the undergraduate school. I guess the biggest class is like 150, is that right?
You know, one thing I want to mention to you guys was that your program is always on our minds here. We constantly talk about it, we constantly talk about recruiting. You guys are just as important. I know there’s some feeling here about second class citizens. There’s some BS like that, and that is BS. We think you guys are really important.
In fact, I told Ken that there’s a really high regard – at least in my world on Wall Street – for people out of this undergraduate program and undergraduates have a little bit of an edge on Wall Street, but this year it may be tough all around.
I want to talk a little bit about what I do and when I started [my career] so you guys have some feel for that. I came out of school in 1982 and I went to work for Republic Steel. I didn’t go right into Wall Street. Then I went to a mutual fund and then to Goldman Sachs. I was the head trader at the junk bond desk for Goldman Sachs and I did that for eight years. If any of you guys know anything about economic history or Wall Street History, I was on the other side of Drexel Burnham [which was] run by a guy by the name of Mike Milken. So I was there early in the junk bond era at Goldman Sachs.
When I left I started a hedge fund called Appaloosa Management. Appaloosa was a fairly early hedge fund and we’ve been doing it for 15 years. We’ve invested in distressed debt and we invest around the world. We were one of the first investors in Russia and I was in Russia in 1996 when Yeltsin was on the tank. We can talk about that, if you guys would like to. We’ve had Donald Trump in my office and we could talk about Donald Trump if you’d like to. [Laughter]
Appaloosa was the first non-Korean to buy Korean treasuries. We were there in the Asian meltdown in 1998, so we can talk about that if you’d like. We were big in 2002 scandals – Adelphia and WorldCom and different business scandals. We were big in some of those companies, investing in them on the way up and we can talk about that if you’d like.
If you like we can talk about the job market on Wall Street this year, which is going to be a little bit tougher for you guys coming out, you seniors. It’s unfortunate, but hey, it’s just the way it is and you know, hopefully it’ll all work out and you have a long life, and it will [work out], because you’ve got a great education here. I really, really believe that.
I think they’re always going to hire a certain amount of people from here, but it is a tough year and there are a lot of firms losing money and top guys losing money, and losing their jobs. We can talk about the current market right now, if you want. I think it’s a very tough market right now. We’re probably in the biggest percentage cash we’ve ever been in my fund.
The other thing you should ask is about life and family and what’s important. You know, one weekend that I was going to come up here, I was stuck on the runway. We actually had my reunion – it was my 25th reunion – and I was going to go home the next morning and come back the next night because my daughter had a – I think it was a county match – for volleyball, which is the stuff that’s really important in life and will always be important and you guys should know that.
Anyways, I’ve given you a bunch of different things that I’m going to try to open up for questions.
I’ll start off with an easy one: you seem like you’ve realized all your ambitions; you’re very successful, but what were your ambitions when you were an undergrad?
When I was an undergrad, I was trying to figure out what I wanted to do, whether I wanted to go to law school, or go into business, so I took the LSATs and I took the GMATs. I decided on business school.
And I thought about acting. Like a lot of people, I was the best actor in my high school. When you’re the best actor in your high school, you think you’re going to be a famous actor until you meet the other 100 people that are best actors at their high schools when you go to college.
I decided on business at some point when I went to work for a bank in Pittsburgh in the credit department. Then I went to work in their trust department as a stock analyst. I really wanted to be an investor. That’s what I really wanted to do.
Actually when I was an undergrad, I was trading stocks for myself with whatever money I’d made on the side. And coming from Peabody High School, I didn’t have a lot of money on the side.
I knew I wanted to be in investing somehow. Although, even working at Equibank — that was the name of the bank — I don’t know what it’s called now; probably three take-overs ago. I was a security analyst over there, but I really didn’t know how it all tied together and when I came here [Carnegie Mellon], I had some ideas, but this place really gave me everything I needed.
I guess this doesn’t totally answer your question, but I’m going to sell the school a little bit – even though I went to work at Republic Steel afterwards, when I went to Wall Street, I was just so far in front of other people, like with options theory.