David Tepper’s hedge funds are off to a fast start this year, but he isn’t getting too complacent about the surging equity markets. In a recent piece on Institutional Investor Tepper is described as being heavily exposed to CMBS and equity markets. II explained his recent positioning:
“At year-end, he had established 13 new equity positions, the largest being Micron Technology, Dean Foods and General Motors. In fact, at year-end, Appaloosa was the second largest holder of Dean Foods, with more than 10.7 million shares.
Sure enough, in the first two months of this year, shares of Dean Foods were up more than 19 percent while Micron surged about 39 percent.
Entering the new year, Tepper also still had a big bet on banks, which helped fuel his triple-digit returns in 2009. In fact, his three largest equity holdings were Citigroup, Bank of America and Wells Fargo.”
Although Tepper sees the recovery intact he is increasingly concerned about the crisis in the Middle East. He says that contagion into Saudi Arabia would cause him to become incredibly cautious:
“However, he is seemingly most concerned about developments in the Middle East. Tepper is said to be especially concerned about Saudi Arabia. Sources say if the oil fields in Saudi Arabia are burning, Tepper would react to that by selling and going heavily into cash. In general, he is said to believe if the Middle East blows up, you can lose half your money.”
Read the full piece here.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.