David Tepper is the latest hedge-fund heavyweight to go the family-office route


David Tepper, considered arguably the greatest investor of his generation, is preparing to return clients’ money and convert his hedge-fund firm to a family office, according to reports. That would make him the latest in a string of high-profile, hedge-fund managers to go that route.

Tepper’s Appaloosa Management L.P. has earned an average annual return of 25% since its inception in 1993, according to CNBC. The fund regularly features among the ranks of all-time top performers, making the 61-year-old Tepper, a former Goldman Sachs banker, one of the world’s most influential market-moving investors. In 2014, Josh Brown, in his Reformed Broker blog, declared the “apotheosis of David Tepper” complete, noting he was younger than industry stalwarts George Soros and Leon Cooperman, “less cantankerous” than Dan Loeb and Carl Icahn, able to claim higher returns than David Einhorn and Bill Ackman, and carried none of the “regulatory taint” of Steve Cohen.

Archive: The rise of David Tepper

The Wall Street Journal, citing people familiar with the matter, reported that Tepper plans to turn the firm into a family office managing his personal wealth as he spends more time focused on running the Carolina Panthers football team, which he purchased last year. An Appaloosa spokesman told the newspaper that the firm hasn’t set a timetable for the return of all outside money.

News reports said Tepper’s money already makes up around 70% of the firm’s roughly $13 billion in assets under management. Tepper has long eschewed the single-minded pursuit of an ever-larger capital base, with the firm said to return money to investors most years.

A move to a family office would see Tepper join several of his prominent peers, including Soros, who moved in 2011 to close his hedge fund to outside investors. Billionaire John Paulson also indicated earlier this year that he was weighing a transition. Cooperman returned all capital to investors in his hedge-fund firm, Omega Advisors, at the end of last year.

“There have been several of these transitions to family offices in recent years, and they’ve generally been funds which have been closed to new investments/investors for extended periods of time. It seems a logical way for a well established principal to continue the role as directing investments for a smaller and more personal capital pool, but with less pressure to expand capital base or bring in new clients,” said Ken Heinz, president of hedge-fund data and research firm HFR.

“This may allow the principal to focus on other personal or charitable pursuits or passive advisory roles, etc. This also typically results in key portfolio managers from the previous fund firm launching their own new funds, with full support and backing from the principal of the previous funds,” Heinz said.

Want news about Europe delivered to your inbox? Subscribe to MarketWatch’s free Europe Daily newsletter. Sign up here.

Source : MTV