David Tepper is known as one of the best hedge fund managers on his generation, generating steady returns for client investors over many years. He is the founder and president of the Appaloosa Management hedge fund, which now manages around $13 billion as of July 2020.
As of 2018, Tepper also bought the Carolina Panthers professional football team in a $2.3 billion deal after relocating his hedge fund from New Jersey to Florida. He worked as the head of the non-investment-grade bond desk at Goldman Sachs but decided to found Appaloosa Management in 1993 after being passed up for a promotion to partner.
David Tepper’s Early Life
Born on September 11, 1957, David Tepper was raised on the East End of Pittsburgh, Pennsylvania. At an early age, Tepper demonstrated a strong fascination for football and baseball. He noted that he would memorize baseball statistics on baseball cards that he was gifted from his grandfather.
Tepper attended Peabody High School, located in Pittsburgh’s East Liberty neighborhood,. He attended the University of Pittsburgh, where he obtained a Bachelor of Arts degree in the field of economics and graduating with honors. He also began to invest small amounts throughout college, spurring his interest to work within the finance industry.
David Tepper’s Career
David Tepper first went on to work for Equibank in the treasury department as a credit analyst. However, shortly after, unsatisfied with his position, he decided to enroll at Carnegie Mellon University’s business school to secure a Master of Business Administration (MBA), or what it was known at the time as a Master of Science in Industrial Administration (MSIA).
Upon earning his MBA in 1982, Tepper went on to work in the treasury department of Republic Steel. However, in 1984, he ended up being recruited to Keystone Mutual Funds.
Just one year later, in 1985, Goldman Sachs recruited Tepper as a credit analyst, as they were putting together a high yield debt team in New York. Tepper became the head trader within six months and ended up staying with Goldman Sachs for seven years. Tepper specialized in distressed debt – namely bankruptcies and special debt situations. Tepper decided to leave Goldman Sachs in 1992 after being passed up for a partner position.
In early 1993, Tepper ended up trading at a desk with Goldman client Michael Price. Tepper’s goal was to raise enough capital to start his own fund. He was able to raise enough and create “Appaloosa Management” as a hedge fund.
Appaloosa Management invests in fixed income markets and public equity. Being founded by both David Tepper and Jack Walton, it initially started as a distressed debt investment shop but ended up being known as a hedge fund later.
The fund generally focuses on undiversified and concentrated positions, particularly on equities and debt of distressed companies, fixed-income instruments, and derivatives.
Appaloosa Management went on to achieve a very impressive track record of generating returns for investors. In the hedge fund’s first six months of operation, it delivered 57% of returns on its raised capital, growing to $300 million assets under management (AUM) by 1994. Fast forward 20 years to 2014, the fund reported an AUM of US$20 billion.
Despite short-term market volatility, in the long term, Appaloosa’s generated strong returns. Forbes reported that a $1 million investment with Appaloosa at its inception, it would be worth $181 million 20 years later.
Tepper’s been an avid sports fan, translating to some investments into professional sports teams. On September 25, 2009, Tepper purchased a minority 5% stake in the Pittsburgh Steelers – a team in the National Football League (NFL).
In 2018, Tepper bought the Carolina Panthers – another team in the NFL – from the original owner, Jerry Richardson. The $2.2 billion bid at the time was the highest in NFL history.
After he purchased the Carolina Panthers, Tepper ended up bidding for an expansion team within the Major League Soccer (MLS) league. In July 2019, the Carolina Panthers organization was awarded an expansion team in the MLS – Charlotte FC.
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