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. 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.
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.
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, options, futures, 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.
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