“Yield-to-Death”: Tepper’s First EM Investment

“What is the yield-to-death?”

Those words spoken by the legendary hedge fund king, and new owner of the Carolina Panthers, David Tepper, to my salesperson in 1993 when we trying to convince him to buy a chunk of Peruvian busted bank loans at around 8 cents on the dollar.

Due Diligence

Tepper was half joking of course but he was covering all the bases as his fledgling hedge fund, Appaloosa Management, began to venture into the new emerging asset class of LDC debt.  He was, as any good trader and investor, skeptical and concerned of the country’s political stability.

The Shining Path, the Maoist guerrilla group terrorizing the country; the risk of a military coup d’etat and all the uncertainties, which come with investing in an emerging market country.

He did pull the trigger, and if my memory serves me correct,  it was, or one of, his first investments in the emerging markets.   If he held the position, and I am sure he did, the loans appreciated close to 1,000 percent of the next few years.

Tepper is one tough dude but a helluva a good guy.

I like, and totally agree, with what he said today on CNBC.  This took some courage.  Do you think he cares about the backlash from those who disagree?   Come on, man!

Billionaire hedge fund manager and new Carolina Panthers owner David Tepper lashed out at critics of NFL players, in particular President Donald Trump.

The Appaloosa Management head said more focus should be on the good his players and others do in their communities and not on the headline-grabbing protests staged during the national anthem.

“These are some of the most patriotic people and best people. These are great young men,” Tepper told CNBC’s Scott Wapner in a “Halftime Report” interview from Carnegie Mellon University. “So to say that [they aren’t patriotic] makes me so aggravated and angry. It’s just wrong, it’s dead wrong.”   – CNBC

Brass Balls

Tepper truly has brass balls. I have read he keeps a pair on his desk.

During the good old days of extreme volatility in emerging markets debt,  there were periods when some sovereign bonds sell-off of 20 points in one day because of contagion from, say, the 1997 Asian Crisis and the 1998 Russian Debt Default.

When it always felt the worse, when the world was coming to an end,  Tepper was in buying.  Not always picking the bottom but he knew nobody can pick the bottom.

He did get caught in Russian local bonds n 1998, however, betting wrongly the Yeltsin government would choose inflation over default.  He says it was his worst trade ever.

David Tepper makes me wanna become a Panther fan.