Los nuevos reyes del Antiguo: David Tepper

2013 Earnings: $3.5 billion
Tepper has set a new standard for hedge fund managers. His track record has long been phenomenal, but since the financial crisis his returns have reached a whole new level. In 2013, the 56-year-old founder of Appaloosa Management outperformed the U.S. stock market and the vast majority of hedge fund managers, with his biggest fund posting net returns of more than 42%. Over the last five years, Tepper’s main hedge fund has generated annualized net returns of nearly 40%—and gross returns of some 50%. In what has almost become an annual tradition, Tepper gave back some cash to his investors at the end of the year. In 2013, Tepper’s Appaloosa celebrated its 20th anniversary by pledging $20 million to various charities. Tepper also gave $67 million to Carnegie Mellon University last year—adding to the $55 million he previously gave the university—and continued to support other causes like basic needs and education.

Appaloosa Management is an American hedge fund founded in 1993 by David Tepper and Jack Walton specializing in distressed debt.Appaloosa Management invests in public equity and fixed income markets around the world.

In 1993 David Tepper and Jack Walton founded Appaloosa Management, an employee owned hedge fund, in Chatham, New Jersey.[4][5] The firm through the 1990s was known as a junk bond investment boutique and through the 2000s a hedge fund.

2002 Conseco & Marconi Corp.

In the fourth quarter of 2002 Appaloosa Management returns were heavily a result of junk-bond and distressed debt bets in Conseco and Marconi Corp. that the market was bottoming out.

2007 Delphi

Assets under management in 2007 were $5.3 billion. The Financial Times reports the company has “attracted interest for its large ownership position in Delphi, the bankrupt car parts supplier, and its clashes on whether management has the shareholders best interests in mind or those of GM and the UAW.”

2008 financial crisis through 2011

Appaloosa survived the financial crisis of 2008 with relatively few investor redemption orders.

From 2009 to 2010 Appaloosa Management’s assets under management grew from $5 billion to $12 billion.

In November 2010 the New York Times reported total assets under management of $14 billion.

In 2010 it was reported that since 1993 Appaloosa Management had returned $12.4 billion to clients—ranking it sixth on a ranking of total returns to clients by managers since inception.

In 2011 the company was awarded the Institutional Hedge Fund Firm of the Year award.

In Sep 2011, a Delaware bankruptcy court found that Appaloosa Management is one of four hedge funds that had played a role in Washington Mutual’s restructuring which might have received confidential information that could have been used to trade improperly in the bank’s debt.

Investment Strategy

Appaloosa Management’s investments focus on undiversified concentrated investment positions.Appaloosa invests in the global public equity and fixed income markets with a focus on “equities and debt of distressed companies, bonds, exchange warrants, optionsfutures, notes, and junk bonds.” According to BusinessWeek, the firm’s client base consists of high net worth individuals, pension and profit sharing plans, corporations, foreign governments, foundations, universities, and other organizations.” Investors commit to a locked period of three years during which their withdrawals are limited to 25 percent of their total investment.

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Palomino Fund

The Palomino Fund from its inception in 1995 to 1998 had a 25 percent return. After Russia defaulted, the fund lost 49 percent of its value between February to September 1998. The fund returned –26.7% percent in 2008 and 117.3 percent in 2009. The company was ranked by Bloomberg Markets as the top performing fund of any hedge fund manager managing over one billion dollars

source:businessweek

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Banqueros Automáticos:The computers that run the stock market

Citadel Securities has quietly become one of the largest forces in U.S. stock trading.

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From the 35th floor of a downtown Chicago office tower, Citadel executes one out of every eight stock trades in the United States. At roughly 900 million shares a day, more stocks move through Citadel’s systems than the New York Stock Exchange, which trades roughly 700 million shares a day.

If you own a 401(k) or have ever used an online broker, your trades have almost certainly passed through Citadel.

The most notable thing about the firm’s trading floor is how eerily quiet it can be.

About 40 people “run” the trading floor, but they are simply overseeing computers that use algorithms to fill and route stock orders.

Related: High speed traders pay for an edge

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Welcome to the new world of trading: More and more, high speed computer programs are replacing thousands of floor brokers once seen running and yelling across the floor of the NYSE.

Citadel’s “floor” brokers don’t do a lot of running. They sit together behind rows of computer terminals, clicking away on keyboards to ensure the firm’s computers are operating correctly and are connected to all the right exchanges.

In essence, Citadel’s proprietary computer programs have become the new eyes, ears, and brains of the U.S. stock market.

About 20 programmers create the computer algorithms that decide how to execute each order, and what to send to public exchanges or so-called dark pools.

Dark pools may sound like the favorite haunts of Star Wars villains, but they are simply venues where buyers and sellers can submit bids without disclosing them to the public markets. Citadel operates a dark pool called Apogee out of its New York office.

Citadel’s programmers are constantly making adjustments as computers “learn” customer behavior to make the process more efficient.

“All the decisions are made by the computers,” Jamil Nazarali, Citadel’s head of electronic execution, told CNNMoney during an exclusive behind-the-scenes tour. “The people here are not making any decisions with respect to whether an order should be filled or at what price it should be filled. That’s all done in an automated way.”

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Split second decisions: Citadel’s computers execute a buy or sell order nearly instantaneously.

When Citadel’s computers do not to fill an order internally, the trade is pushed along to one of 13 public exchanges or one of more than 20 dark pools.

By law, Citadel must match or give a better price than what’s been quoted on a public exchange, said Nazarali.

But some industry watchers question whether Citadel’s prescient computer programs are always giving customers the best price.

Nazarali says they do: “As a market maker, I have a regulatory obligation to fill all customers orders on my book before I trade.”

He said Citadel’s systems actually create an even playing field between high-speed traders and retail traders who place orders through brokers like TD Ameritrade (AMTD)because they all have access to the same technology.

The industry’s primary regulator, FINRA, recently asked some market makers and dark pool operators to provide information on how they fill trading orders. Regulators are worried about high-speed traders get an edge over other investors in certain trading venues. It’s unclear if Citadel was part of that group, and FINRA declined to comment.

Trading is definitely faster, but whether it’s better and cheaper for the average retail investor remains to be seen.

Principal regulador de la industria, FINRA, recientemente pidió a algunos creadores de mercado y operadores de piscinas oscuras para proporcionar información sobre cómo se llenan las órdenes de operaciones. Los reguladores están preocupados por los operadores de alta velocidad consiguen una ventaja sobre otros inversores en determinados centros de negociación. No está claro si la ciudadela era parte de ese grupo, y FINRA declinó hacer comentarios.

El comercio es definitivamente más rápido, pero si es mejor y más barato para el inversor minorista medio aún está por verse.