“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 were 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 about 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.

I recall 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 over the next few years.

Tepper is one smart and tough dude, and a helluva a good guy.

NFL Owner With Courage

I like, and totally agree, with what he said today on CNBC.  This took some courage.

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

Do you think he cares about the backlash from those who disagree, including POTUS?

Come on, man!

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 would sell-off 20 points in one day due to 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 smartly knew nobody can pick bottoms.

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

Go Panthers

David Tepper makes me wanna become a Panther fan.




Strike that,  I am now a Panther fan because of David Tepper.

This entry was posted in Bonds, Emerging Markets, Uncategorized and tagged , . Bookmark the permalink.

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

  1. “Yield-to-death” would have optionality. You could run OAS based on mortality tables and health parameters.

  2. It illustrates David’s sangfroid.

  3. Pingback: Gotta Love David Tepper! | Global Macro Monitor

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