Monday, October 3, 2011

Meet David Tepper managing Appaloosa

David Tepper Hedge Fund Manager Appaloosa Management
He is a “distressed-debt specialist”, was once (2003) considered to be “the hottest investor on wall street” and was one of the top 10 money earners in Institutional Investor’s Alpha’s Ranking of the world’s 25 Highest-Paid Hedge Fund Managers in 2004. He also ranked second on the same list in 2003. With an estimated current net worth of around $1.2 billion, he is ranked by Forbes as the 645th richest person in the world.
Tepper was born in Pittsburgh’s East End, the second of three children. During his adolescence he spent plenty of time with his maternal Grandfather, Benjamin Tauberg. The two were huge fans of baseball, especially the Pittsburgh Pirates. Tepper said of the game, "I loved baseball. I lived and died for Roberto Clemente. I knew every player in the major league. You could pull a player’s card, and I could tell you the statistics."
David and his family lived modestly in a four-bedroom plain redbrick row house or terraced house in Stanton Heights. David stuck close to his father Harry and mother Roberta. His father was a bright accountant with a modestly sized firm. His mother was a homemaker, but decided to become an elementary school teacher and taught at different Pittsburgh Public Schools.
David attended Peabody High School where he was good at math but never received an 'A'. Tepper would ask plenty of questions as a student, but didn't study often. Although Math was an easy subject and he could memorize baseball statistics with ease, it did not translate into his academic performance.
David showed an interest in his father’s investments and the numbers associated with them. His father made a hobby of investing in the markets and would share his knowledge with the family over dinner. David showed immediate interest in his first investments, "Pennsylvania Engineering Co" and the soon to be bankrupt "Career Academies", that were given to him by his father.
While in High School he had a hand at Intramural football, but preferred acting because he didn't like the condition of the football field. During his senior year he won the school's best actor award for his role as "the father" in Bye Bye Birdie and received a standing ovation at the awards ceremony.
The University of Pittsburgh would prove to be a stepping stone for David. His grades improved significantly and he paid his way through school by working at the Fine Arts library. He graduated with honors receiving his Bachelor of Arts degree in Economics. He also dabbled in the markets during college.
After graduation he entered the finance industry working for Equibank as a Credit Analyst in the Treasury department. In 1980, unsatisfied with this position he enrolled for his Graduate Degree from Carnegie Mellon University.
Tepper has an uncanny ability to invest in a market outside of his expertise. Tepper was the former head of junk bond trading at Goldman Sachs In 2001 he generated a 61% return by focusing on distressed bonds, and in the fourth quarter of 2005 he pursued what he saw as better opportunities in Standard & Poor's 500 stocks. He makes significant gains year after year by “investing in the diciest of companies,” such as MCI and Mirant. Investments in Conseco and Marconi also led to huge profits for the company’s hedge funds while Tepper “keeps the market on edge.”
On March 19, 2003 David announced he would make a single donation of $55m to Carnegie Mellon University's Graduate School of Industrial Administration. This donation was made after being encouraged by Kenneth Dunn his former professor who became Dean of the school. He accepted the suggestion, but made it a “naming-gift” and suggested the school's name be changed to David A. Tepper School of Business.

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