Carolina Panthers fans may not exactly be enamored with David Tepper these days.
But the remaining investors in his Appaloosa hedge funds must be pretty happy.
The eclectic investor and owner of the professional football team posted gains between 18 percent and 19 percent in 2023, according to an investor.
While this lagged the S&P 500’s 24 percent gain, it came on top of Appaloosa’s 12.5 percent return in 2022, a year when the benchmark was down 19 percent and many hedge funds lost even more than that.
Many Tiger Cubs and other funds performed better than Appaloosa in 2023. But after losing between 20 percent to more than 50 percent in 2022, these rival hedge funds are still well below their high-water marks.
Not Appaloosa.
Tepper declined to comment.
Tepper is an opportunistic investor seeking the most attractive opportunities in any market at any given time. He takes pride in being a great distressed, stock, and macro investor.
Before year-end, Appaloosa was managing about $17 billion. But each year Tepper typically returns about half of the returns to investors.
One investor estimated that about 10 percent of capital currently is held by outside investors these days.
Since its 1993 inception, Appaloosa has posted a gross annualized return of more than 28 percent, while its net return is likely somewhere between 23 percent and 25 percent. That track record makes Tepper perhaps the best performing hedge fund manager who does not rely on computers to make investment decisions. (That nod goes to Renaissance Capital’s Jim Simons).
According to an investor, Appaloosa’s 2023 performance was driven by U.S. stocks and hedging at the right time.
Appaloosa especially benefitted from the so-called Magnificent Seven stocks that drove the stock market last year and heavily boosted the tech-focused crowd.
At the end of the first quarter, shares of Alphabet and Amazon — its two largest U.S. longs at the time —accounted for nearly one-quarter of assets while Meta represented nearly 8 percent of assets, according to a regulatory filing.
Then in the second quarter Appaloosa aggressively ramped up its bets on the most popular — and top performing — stocks.
Chip maker Nvidia, the market’s top performer in 2023, became the hedge fund firm’s largest long after the manager expanded the position by 580 percent.
Appaloosa also more than doubled its stake in Meta, becoming the second largest long, increased its stake in Microsoft by nearly five times, and lifted its position in Amazon by nearly 60 percent.
Altogether, these four stocks accounted for nearly one-third of Appaloosa’s U.S. common stock longs as of the end of the second quarter.
In the third quarter, Appaloosa again boosted its stake in Meta, Microsoft, and Amazon, its three largest longs as of September 30. These three stocks along with Nvidia accounted for about 40 percent of assets as of the end of the third quarter, according to filings.
Looking ahead, Tepper has told clients he is considering stocks outside the U.S. and believes the Japanese yen looks interesting.
But much of this depends on where interest rates are headed this year.
As for the Carolina Panthers…
