David Tepper: Potential Upside is Large

By on September 24, 2010

David Tepper, president and founder of $12.4 billion Appaloosa Management, was on CNBC this morning commenting on the prospects for the market. Tepper has had impressive results managing a couple of hedge funds over the past 17 years. He claims his investors have averaged 30% annual returns over this timeframe, although the swings in returns have been wide from year to year, or “consistently inconsistent” as he put it.

Tepper’s view of the stock market is bullish near-term based on simple reasoning. He said the economy may get better on its own which would be good for assets. If the economy gets weaker, the Fed will come in and ease which will also be good for asset prices. Tepper said he’s increased the equity allocation in his funds recently.

SMA Comment: It will be interesting to see how Tepper performs with his enlarged asset base. I would bet that over the next 5 years he will be a lot closer to the average hedge fund, with a good chance of being worse.

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