Appaloosa Management’s David Tepper is warning investors that next year could become a repeat of 1999, when the markets bubbled to a mighty froth before beginning a three-year collapse that bottomed in 2002. In an email to CNBC, the Short Hills, New Jersey manager stated: “This year rhymes with 1998. Russia goes bad. Easing [is] coming from Europe. Sets up 1999.... [oops] I mean 2015.” According to CNBC, Tepper did not say that the market would peak next year. However, he did warn investors: “You [just] have to be aware of the possibility for some sort of overvaluation of the markets. And they are fair value now. Worldwide money [was] made too easy for where USA fundamentals were in both late 1998 and 2014.” Alas, Tepper did concede that what happened in 1999 is “not exactly the same” but he did say it was “similar.” If you recall, the S&P 500 jumped 19 percent in 1999 thanks in large part to the delirious runup in tech and Internet stocks. But, after peaking in early 2000 the markets spiraled downward until 2002. “Remember in 1999 the S&P [500] went to a 30 PE [price-to-earnings ratio]. Next year PE is now like 16,” Tepper reportedly wrote. Last week we noted that Tepper’s Palomino Fund jumped 4.50 percent in November, pushing its gains for the year so far to slightly over 2 percent. As a result of the modest performance, it is likely Tepper will relinquish his top spot on the Rich List this year.
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Larry Robbins’ Glenview Capital Management filed a 13G on three different companies, indicating it has established passive stakes of at least 5 percent. The New York hedge fund boosted its stake in hedge fund favorite Avis Budget Group by roughly 1.5 million shares, to more than 5.44 million shares, or 5.12 percent of the car rental giant. Glenview was already the eighth largest shareholder at the end of the third quarter. Feroz Dewan’s New York-based Tiger Global Management hedge funds were the ninth largest shareholder, with 3.18 percent of the shares while Richard (Mick) McGuire III’s San Francisco-based Marcato Capital Management was the tenth largest holder with 2.82 percent of the shares. The stock rose about 5 percent on Tuesday.
Glenview also raised its stake in Lithia Motors, Inc., an operator of auto dealer franchises, by about 240,000 shares, to 1.4 million, or 5.92 percent of the total outstanding. It is the second largest shareholder. The stock rose about 4 percent on Tuesday.
The hedge fund also increased its stake in PVH Corp. by 400,000 shares, to more than 4.5 million shares. It now owns 5.50 percent of the apparel company known for such iconic brands as Tommy Hilfiger, Calvin Klein, Van Heusen, IZOD and Arrow. Glenview is the third largest shareholder. The stock rose about 2 percent on Tuesday.
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Davidson Kempner Partners disclosed it owns 350,000 shares of CB Pharma Acquisition Corp., lifting its passive stake to 6.44 percent. The company, a biotech-focused blank check company backed by Coronado Biosciences, went public last week at $10 a share.
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Shares of Keurig Green Mountain fell more than 2 percent on Tuesday after the maker of single serving coffee systems announced it will recall 7.2 million brewing systems, warning that water can overheat during the brewing process, spray out and burn consumers. We reported earlier this month that David Einhorn’s Greenlight Capital told clients in its third-quarter letter that it closed out its ill-fated short in the company in the third quarter. The stock is down about 13 percent from its November 18 high but is still up more than 4 percent for the quarter.
