Seeking Alpha

What worries David Tepper?

If I was a long/short guy, I'd be worried, Tepper tells Bloomberg TV. Growth is good, inflation is low, rates are low ... "We're going to get 20% (in the markets) next year ... I"m worried by long/short friends are going to lose their jobs." Can markets correct 5-10% amid the taper? Of course.

Of his J.C. Penney (JCP) stake, he's pleased with the big move higher over the past month, but it's strictly a trade on a stock that had gone down too far too fast. He remains long Citigroup (C) and calls it a $70 stock.

Talking a bit more about his Treasury call, he says he's short even though he considers it an impossibility for the 10-year Treasury to get over 3.5%-3.75%. "I'd bet anything on that."

The 10-year/2-year Treasury spread is at 251 basis points, within shouting distance of the record 292 basis points. To believe the 10-year Treasury yield can rise another 100 bps (while the Fed holds the short end down) is to believe an existing record will be smashed.


Earlier: Tepper shows what a real bubble looks like

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Comments (12)
    , contributor
    Comments (3631) | Send Message
    Tepper is one of the brightest investors on the street.


    Agree with his Citi call but imo it hits low $80's in next 18-24 mths with a new credible dividend and competitive buyback announced 1st qtr 14 .
    21 Nov 2013, 05:25 PM Reply Like
  • WisPokerGuy
    , contributor
    Comments (1123) | Send Message
    Agree. Tepper is one of the few "talking heads" I always stop and listen to when he's television. It has paid me to pay attention to him. He's rarely been wrong.
    21 Nov 2013, 06:26 PM Reply Like
  • Jason B
    , contributor
    Comments (436) | Send Message
    I'm sure Tepper would agree with you on the 80's price, but his time frame is shorter than ours. He is looking at about 12 months or so.
    21 Nov 2013, 10:52 PM Reply Like
    , contributor
    Comments (1158) | Send Message
    watched in on the tube, pretty good and agree w him on his jcp thoughts that it could be back to 20 range real quick w short pos and one good report. lots of large hedge funds are watching & starting to go long as a trade..
    21 Nov 2013, 05:31 PM Reply Like
  • stock_ideas
    , contributor
    Comments (17) | Send Message
    3.5 - 3.75% is a HUGE jump from here on the 10 YR UST. Let's get over 3.25% first, major resistance first and take a breather. I agree with his view on those targets, but it is only a matter of time.
    As two side thoughts, back in 2010 the market consensus was looking for 4.5% to 5.5% on 10 YR USTs. Both bulls and bears said noway rates could go any lower. They bottomed at 1.6%.
    Secondly, if I had asked anyone EXACTLY one year ago, if they envisioned the market above the old highs or how about 200 points above the old highs, they would have thought I was crazy. Go figure.
    21 Nov 2013, 05:56 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (6156) | Send Message
    When Mr Tepper talks , one should listen !
    21 Nov 2013, 06:44 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10113) | Send Message
    Tepper is one of about six people worth listening to on the Street.


    ...and, yes, a 3.50% 10 Year ain't happening anytime over the next few years (at least).
    21 Nov 2013, 07:31 PM Reply Like
  • omarbradley
    , contributor
    Comments (964) | Send Message
    tough year for conservative asset management...especially at the institutional level. hedge funds have really been bad many years now...they're paid to take the risk but most have really been terrible. besides Buffet those who have done nothing have done best. would appear the "great rotation" thesis was the right call this year.
    21 Nov 2013, 11:04 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1796) | Send Message
    Anyone know where we can get a transcript of his comments? I'm confused as to why he is worried about his long/short friends? If he thinks the market will go up 20%, most of the typical long/shorts will likely do okay I'd assume....
    22 Nov 2013, 12:48 AM Reply Like
  • DAG Investments
    , contributor
    Comments (4299) | Send Message
    Many long/short funds are suffering because they're often locked into strategies that mitigate risks and do well in most markets, but that are doing just the opposite in this market. In a market where practically everything has gone straight up for a full year, they're losing their shirts on short positions even though long positions might be doing well. Very many funds are "market-neutral" by design, meaning that the total amounts of capital they deploy to long and short positions are always equal. So, in a year that a monkey could throw darts at a list of stocks and gain 20%, they'll be lucky to break even. That's not because they don't know what they're doing, but because this is the rare market environment wherein a normally successful strategy backfires. I assume Mr. Tepper is worried his friends will lose their jobs because he knows that clients tend to have very short memories and will conveniently forget how much money the very same funds likely made and/or saved for them in most years.
    22 Nov 2013, 02:03 AM Reply Like
    , contributor
    Comments (3631) | Send Message
    I certainly like the shorter time frame.
    Will Always appreciate being corrected by Tepper on that score.


    Good luck.
    22 Nov 2013, 09:10 AM Reply Like
  • idkmybffjill
    , contributor
    Comments (1796) | Send Message
    Tepper is said to have earned about $3 billion to his personal fortune for Appaloosa's performance this year.


    This guy is absolutely insane.


    Jim Simons has some competition...
    30 Dec 2013, 10:50 PM Reply Like
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