David Tepper $7 Billion

David Tepper's Hedge Fund Makes A $7 Billion Profit in 2009

David Tepper had more optimism than most coming into 2009 and it paid off, big.  Mr. Tepper and his hedge fund, Appaloosa Management, have made one of the largest single-year profits in recent years, hauling in $7 billion.  Tepper believed that the economy would not crash as severely as many feared and that banks would start to recover in 2009, so he bought shares of Bank of America when they were trading at $3 and CitiGroup at below $1.  The move paid off in a big way as both banks have recovered at least in part and shares are now trading considerably higher (BofA more so than Citi).  Few were convinced that it was safe to start trading again, as Tepper says of the time,  "I felt like I was alone." Some days, "no one was even bidding."

The bets paid off. A resurgent market has helped Mr. Tepper's firm, Appaloosa Management, gain about 120% after the firm's fees, through early December. Thanks to those gains, Mr. Tepper, who specializes in the stocks and bonds of troubled companies, manages about $12 billion, a sum that makes Appaloosa one of the largest hedge funds in the world.

Mr. Tepper, whose office overlooks the parking lot of a Hilton hotel in Short Hills, N.J., across from an upscale mall, now is taking aim at a new target. He's purchased about $2 billion of beaten-down commercial mortgage-backed securities. Among his purchases are bonds backed by chunks of the debt of Peter Cooper Village & Stuyvesant Town and 666 Fifth Ave. in New York, two high-profile real-estate deals that have fallen in value over the past two years.

Mr. Tepper grew up in a middle-class neighborhood in Pittsburgh, the son of an accountant who worked seven days a week and once won a $715,000 lottery payout. In the late 1980s, he helped run junk-bond trading at Goldman Sachs. Mr. Tepper wears jeans and sneakers to work, and can be self-deprecating, playing down his successes. He claims to have popularized on Wall Street the phrase "it is what it is" to explain the need to adjust a portfolio if facts on the ground shift.  Source

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