Saturday, January 23, 2016

Norman J Brodeur - David Tepper

Norman Brodeur - David Tepper

Norman J Brodeur - David Tepper

A Dozen Things I’ve Learned from David Tepper about Investing

David Tepper is an the founder of the hedge fund Appaloosa. Bloomberg writes that Appaloosa “invests in the equity, fixed income, and hedging markets. For the fixed income investments, the firm invests in high-yield bonds, bank loans to highly-leveraged companies, sovereign debt, debt of distressed companies, and other debt securities. It employs a fundamental analysis to make its investments.” The Reformed Broker (Josh Brown) adds: “If you had put a million dollars with David Tepper when he started Appaloosa 20 years ago, it would now be worth $149 million net of fees.”

 

1. “We have this saying: The worst things get, the better they get. When things are bad, they go up.”

This is David Tepper’s version of Warren Buffett’s view that the time to be greedy is when others are fearful. The principal cause of significantly mispriced assets is when Mr. Market is fearful. If you can be brave and aggressive at such times perhaps you have one of the attributes of a successful distressed asset investor. The problem is that vastly more people think they can be brave and aggressive at times like this than actually can do so. While Warren Buffett and David Tepper view the same phenomenon (fear) as an investing opportunity, the way they capitalize on the opportunity is very different. Both Tepper and Buffett know that Mr. Market is bi-polar, but they operate in different ways (e.g., operate in different time scales, with different circles of competence; different systems; different temperaments).

No comments:

Post a Comment