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Billionaire David Tepper Is Planning to Return Outside Money

Saijel Kishan and Sridhar Natarajan
Billionaire David Tepper Is Planning to Return Outside Money

(Bloomberg) -- Billionaire David Tepper is planning to return money to investors, following other marquee names who quit the struggling hedge fund industry to manage their own capital.

Tepper, 61, who founded Appaloosa Management in 1993 and is one of the most revered hedge fund managers, hasn’t made a final decision on the timing, according to his spokesman Jonathan Gasthalter. Most of the firm’s $13 billion in capital belongs to Tepper, who plans on converting Appaloosa into a family office.

The move comes after Tepper, a football enthusiast since his childhood in a working-class neighborhood in Pittsburgh, bought the Carolina Panthers last year. The team and their fans warmly welcomed the hedge fund manager, who announced at a press conference last May: “The first thing I care about is winning. The second thing I care about is winning.”

After his $2.3 billion purchase -- a record for a U.S. sports team -- some of his clients became concerned that the demands of the team might distract him from his hedge fund, Bloomberg has reported. The Panthers struggled under his first season of ownership, posting a losing record. He plans on spending more time running the franchise.

Tepper, a former Goldman Sachs Group Inc. trader, established a strong record in his first decades at Appaloosa, making an annualized return of about 25% since its inception. He follows a list hedge fund veterans who have left the industry in the last several years, including Blue Ridge Capital’s John Griffin and Jon Jacobson of Highfields Capital Management.

Appaloosa, with offices in Short Hills, New Jersey, and Miami Beach, Florida, invests in stocks, sovereign debt, high-yield bonds and bank loans of highly leveraged companies, including those that are financially distressed.

Hedge funds, once considered the go-to place for wealthy investors, have struggled to produce the returns they had in their heyday. For years, clients have been running for the exits as managers have posted mediocre returns. The remaining clients have been pushing funds to cut fees that are among the highest in finance.

In the last decade, Tepper, who lives in Florida, has annually returned profits to investors to keep his asset base stable. He has long relied on a small team of employees to manage Appaloosa’s capital in contrast to other billionaires like Ken Griffin.

Tepper has an estimated net worth of about $11.2 billion, according to the Bloomberg Billionaires Index.

(Updates with details on Carolina Panthers in third paragraph.)

--With assistance from Hema Parmar and Katherine Burton.

To contact the reporters on this story: Saijel Kishan in New York at skishan@bloomberg.net;Sridhar Natarajan in New York at snatarajan15@bloomberg.net

To contact the editors responsible for this story: Alan Mirabella at amirabella@bloomberg.net, Vincent Bielski

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