David Tepper is an American self-made billionaire and hedge fund manager who is famous as the founder and current president of the successful hedge fund management firm, Appaloosa Management. Partnering with Jack Walton, Tepper established the distressed debt hedge fund company in 1993, with their main focus on the hedge fund market being distressed companies.
As of May 2015, David Tepper is worth US$10.4 billion and his company manages nearly $20 billion in hedge funds.
Background and Education
David Alan Tepper was born in 1957 to a relatively humble Jewish family in Pittsburgh, Pennsylvania. He went to Peabody High School where he is described as having been not an ‘A’ student but nevertheless good in class and especially in establishing social networks, a character that would later come in handy to help him in establishing wide networks in his business career.
In 1978, Tepper graduated from the University of Pittsburgh with a BA in Economics, and then in 1982 earned his MSIA/MBA from Carnegie Mellon University’s Graduate School of Industrial Administration (GSIA) – which would later be renamed Tepper School of Business in his honor.
David Tepper was introduced into business and entrepreneurship early in life by observing his how his small investor father was running his businesses. Later, he would inherit his father’s two companies, Pennsylvania Engineering Co. and Career Academies to be his first investment vehicles.
While Tepper was able to accrue some good profits from the former, the latter company soon went bankrupt. One of his largest benefits from these two firms was early experience in entrepreneurship as well as key lessons in management and business leadership.
He had worked at Keystone Mutual Funds and Goldman Sachs Group Inc. in key financial management positions before leaving and starting his own company, Appaloosa Management, in 1993. It is at Appaloosa that he would go on to become one of the most successful hedge fund managers in history.
Achievements and Accolades in Business
David Tepper’s Appaloosa Management hedge fund is one of the best perfmoring funds in our hedge fund returns rank. The distressed and event driven fund achieved more than 27% annualized returns in the last 22 years.
In 2001, David Tepper focused almost entirely on distressed companies and used his Appaloosa Management fund to generate a 61% in returns.
In 2003, Appaloosa Management made a record-setting returns of a whopping 148%. Another year of good fortunes for the company was 2009 when it grossed up to $4 billion dollars in a year of its second highest returns ever of 132%.
Tepper was ranked #1 on the 2012 list of the most earning hedge fund investors with a paycheck of $2.2 billion, according to Institutional Investor’s Alpha. In 2013, he achieved the same fete again, grossing $3.5 billion.
In 2014, he was #46 in the Forbes 400 list while in 2015 he ranked #9 among the list of top hedge fund managers. Prior to 2014, Tepper recorded one of the most successful 5-year performance stretches in the history of hedge fund management.
In his 20-year-plus career in the hedge fund industry, Tepper has bought shares into or entirely acquired a number of distressed and near-bankrupt companies. He then went on to turn most of them around or make a fortune out of their distressed equities before they completely went under. They include Enron, WorldCom, Pacific Gas & Electric (PCG), Edison International (EIX), Conseco Inc., MCI, Mirant and Marconi.
Today, Tepper is a renowned expert in distressed equity funds and debt investing. Some of the debts and equities that he has invested in by buying futures on them include: the American International Group Inc. Debt, the Korean Won, the Bank of America equity and the Russian Debt.
Despite his business success, Tepper has also had his own share of ups and downs, with 2014 being one of his most unremarkable years in business. That year, his Palomino fund achieved returns of only about 2.2% net of fees.
Personal Life and Philanthropy
Tepper is married to Marlene Tepper and they have 3 children. The family lives in Livingston, New Jersey. His reported personal interests include providing training skills for his kids’ softball, soccer and baseball teams.
On philanthropy, Tepper is mostly associated with Carnegie Mellon University, where the School of Business has been named after him in appreciation of his donations. He is also a member of the school’s Business Board of Advisors.
In 2013, Tepper gave out his biggest donation of $67 million to the university. Previously, the billionaire had donated $55 million to the same institution. He continues to support and donate towards many other charity causes, especially in basic needs and education, serving on a number of committees and boards for various charity and community organizations in both New York and New Jersey.
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