David Tepper Interview
How David Tepper Made Billions in the Financial Crisis
David Tepper, the billionaire manager of Appaloosa Management, spoke in some detail about his strategy in 2008 and 2009 that made him billions of dollars. During the height of the financial crisis when most hedge funds were just trying to protect against losses, Tepper's fund was buying up shares in failing banks, expecting a rebound that would pay off big. And that is exactly what happened in 2009, when the banks shares that he had bought for cheap started rising Appaloosa Management made $7.5 billion. Here is an interesting interview with David Tepper:
When Lehman Brothers filed for bankruptcy in September 2008, investors panicked on Wall Street, causing dangerous aftershocks across the markets. And while most of Appaloosa’s peers were desperately trying to mitigate losses and stave off redemption requests amidst the market’s free fall, Tepper decided it was the perfect time to leap right into the eye of the storm.
So the fund started aggressively buying up depressed bank debt of holding companies like Washington Mutual and common and preferred stock of Wachovia and others.
One has to wonder if the guy eats nails for breakfast.
“We lead he herd,” he chuckles. “The Street follows us, we don’t follow the Street.”
Tepper was sitting on a pile of cash, having sold out of most of his positions in the spring of 2008, and didn’t have any debt. So when the U.S. Treasury put out a white paper in February 2009 announcing its Financial Stability Plan, which included the Capital Assistance Program designed to shore up the capital of banks, he took his time and read the fine print. read more..
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