Appaloosa: Galloping 'Vulture'
David Tepper may be the hottest investor on Wall Street.
Even in a strong period for the market, the 76% gain so far this year at Mr. Tepper's nearly $3 billion Appaloosa Management is turning heads.
That he has done it investing in the diciest of companies -- most of them in or near bankruptcy situations -- cements Mr. Tepper's position as the current king of so-called vulture investors, known for picking over the carcasses of companies the rest of Wall Street has left for dead.
Mr. Tepper, 45 years old, prefers to describe himself as "the Mother Teresa of the markets," saying, "I'm always there to make sure [securities] don't go down more."
Since October of last year, when many investors were shying away from risky investments, his two hedge funds have been scooping up large chunks of superinexpensive stocks and bonds.
Like other hedge funds -- lightly regulated investment pools for wealthy investors -- Appaloosa borrows money to expand its bets. Since late last year, Mr. Tepper has used leverage to make a big bet on the overall junk-bond market. With junk bonds gaining 14% overall this year, and some of Mr. Tepper's best picks, such as Conseco and Marconi, more than doubling in value, he has rung up giant gains.
Mr. Tepper's heady recent returns illustrate how dramatically the appetite for risk has changed on Wall Street. Indeed, the "distressed" companies Mr. Tepper focuses on have been among the best performers in the past 10 months, even as safer investments, such as Treasurys and more staid stocks, have come under recent pressure.
Partly, that reflects the increased conviction in the economy among investors, which has given them confidence to dip back into some of the beaten-down telecom and financial stocks that Mr. Tepper bought up last year. Lately, Mr. Tepper has been boosting Appaloosa's positions in some of the riskiest companies, such as MCI and Mirant, suggesting he is confident that gains for this slice of the market will continue.
Appaloosa's 76% gain this year, after investor fees are taken out, raises his 10-year average annual return to 31%, beating the 12% annual gain of the Dow Jones Industrial Average. "In the first half of the year everything worked for us," he says.
Mr. Tepper, who was Goldman Sachs's head junk-bond trader in the early 1990s, started Appaloosa in 1993. (He wanted to name his firm Pegasus but the name was taken so "we got out the horse book," he recalls.) While early returns were impressive, other early decisions were fiascoes.
In early 1994, he hired Michael Smirlock, who had been dismissed by Goldman, to start a fund to trade mortgage-backed bonds. Eventually, Mr. Smirlock's fund was spun off, with Mr. Tepper owning 22%. The fund ran into trouble in 1998, but instead of reporting the losses, Mr. Smirlock allegedly began to make up prices of positions in his portfolio. The fund collapsed, Mr. Smirlock was sentenced to prison and Mr. Tepper lost millions of dollars.
Appaloosa lost hundreds of millions in dollars on Russian bonds in the fall of 1998 when the country defaulted on its debt, though it made much of it back buying more of the bonds in November of that year, and watching them recover. More recently, Appaloosa's funds last year dropped 25%, partly due to losses on cable company Adelphia Communications.
"His investors are willing to make the trade-off of volatility in exchange for long-term returns," says Jonathan Kolatch, a portfolio manager at hedge fund Redwood Capital Management who worked with Mr. Tepper at Goldman Sachs. "When he believes in something he buys it, buys it and buys some more, he's not swayed by what's going on in the market."
Mr. Tepper's strategy is to buy the most unpopular companies -- in the U.S., Europe, Asia or anywhere else -- usually as other investors are running for the sidelines. "I'm not afraid to lose money, that's what makes us different," says Mr. Tepper, who eschews cellphones, pagers and Blackberries.
In the past two weeks he has bought up about $100 million of bonds of WorldCom (which recently adopted the name MCI). The bonds tumbled after allegations the company diverted phone calls to avoid paying access fees to competitors. Mr. Tepper's view: Even if the allegations are substantiated and the company pays the fees or even a fine, it won't hurt earnings too much and the accusations won't set back the company's restructuring plans.
In the clubby world of distressed investing, it is hard to mask large positions. But rivals say Mr. Tepper keeps the market on edge, sometimes selling small parts of a bond position, knocking the price down as word spreads on Wall Street. Then he steps in to buy the same bonds in bulk at a discounted price.
Near Mr. Tepper's spot on his firm's trading desk lies a heavy Louisville Slugger, reflecting what often is Appaloosa's bare-knuckled approach. "We're in your face" if necessary, he says.
In the past year, Mr. Tepper helped force Marconi, a British telecom provider in which Appaloosa owns an equity stake of 14%, to shake up its board after a restructuring, in a messy confrontation. Instead of executive bonuses, management will get boatloads of stock if it can get the stock up or pay down debt.
In 1998, Mr. Tepper took the unusual step of suing Merrill Lynch for allegedly disclosing confidential details of Appaloosa's investment in debt of Orange County. Merrill denied the charges. The firms settled the suit out of court.
Often, Mr. Tepper builds a large position in a company's debt, hires a battalion of lawyers, and pushes to ensure his holdings are converted into a significant slice of a overhauled company's equity. He also will pump more money in to help an investment or levy pressure on other creditors to make sure a restructuring takes place. Appaloosa is the co-chairman of Mirant's creditors' committee, which is trying to engineer a turnaround for the company as it operates under Chapter 11 U.S. Bankruptcy Code protection, reflecting his activist approach.
Mr. Tepper only lets investors get out of his funds once a year and can even hold 40% of his investments for three more years if he chooses, though he has never invoked this clause. Those restrictive terms are anathema to some hedge-fund investors who usually are able to pull their money out on a quarterly or monthly basis.
Nonetheless, Mr. Tepper says he has few problems attracting investors. Appaloosa returned about $200 million to investors so far this year, to keep the size of the firm down, and only accepts new money from current clients.
华尔街上空的秃鹰
大卫?特普尔(David Tepper)可能是当今华尔街最炙手可热的投资者。
他手下管理著近30亿美元资产的阿帕卢萨资产管理公司(Appaloosa Management)今年迄今已获得了高达76%的投资回报，即便是在牛市时期，这也是个令人咋舌的数字。
特普尔的投资策略是专挑那些已经破产或是濒临破产的公司，专啃那些华尔街所有其他人都认为已失去生命而弃之不顾的"腐肉"，正是这一点，铸就了特普尔"秃鹰投资者之王"的名声。
现年45岁的特普尔倒是更喜欢把自己称作"市场上的特里萨修女"(Mother Teresa)，说自己总是在市场上帮困助贫。自去年10月以来，当许多投资者都为规避风险而离市观望时，他的两只对冲基金却一直在不停地挖掘大量的超低价股票和债券。
像其他那些管理较为宽松、针对富有投资者的对冲基金一样，阿帕卢萨也借钱投资。去年底以来，特普尔通过杠杆操作在整个垃圾债券市场投下了巨大赌注，而伴随该市场今年以来总体14%的升幅（其中Conseco和Marconi的债券价格更是翻了一倍以上），特普尔也获得了极其丰厚的回报。
特普尔最近获得的丰厚投资回报表明，华尔街的风险偏好已经发生了多么戏剧性的变化！事实上，特普尔专门投资的那些"绩劣"公司，其过去10个月来的表现一直出类拔萃，而在此期间甚至像美国国债和一些表现一贯稳定的股票也感受到了市场不景气的压力。 上述现象部分反映出，投资者对美国经济的信心增加了，这使他们敢于重拾一些饱受打击的电信和金融类股，而特普尔早在去年就已经买进了这些股票。最近，特普尔一直在推动阿帕卢萨资产管理公司增持MCI和迈朗(Mirant)这类投资风险最高公司的股票，这表明，他相信这类股票的涨势还将继续。
在扣除投资者缴纳的费用后，阿帕卢萨今年的投资回报达到76%，这使它的10年平均年投资回报率达到了31%，大大高于道琼斯工业股票平均价格指数12%的年平均增幅。特普尔称，今年上半年他的公司可谓一帆风顺。 特普尔在上个世纪90年代初担任高盛公司(Goldman Sachs)垃圾债券交易部门的负责人，他于1993年创办了阿帕卢萨资产管理公司。在公司创办的初期，虽然投资回报尚称可观，但其他方面却乏善可陈。
1994年初，特普尔雇佣了被高盛开除的迈克尔?斯迈洛克(Michael Smirlock)来创办一个交易按揭债券的基金。斯迈洛克管理的这一基金最终被独立分拆出去，特普尔在该基金中持股22%。这只基金在1998年遇到了麻烦，但斯迈洛克并没有对外宣布亏损，而是开始虚报他投资组合中头寸的价格。这只基金最终难逃倒闭的命运，斯迈洛克被投进了监狱，特普尔也蒙受了数百万美元的损失。 1998年秋，当俄罗斯表示无法偿还到期债务时，阿帕卢萨因其在俄罗斯债券上的投资而损失了数亿美元，不过该公司在那年11月又买进了更多俄罗斯债券，然后就坐等它们逐渐升值，通过这种方法，该公司挽回了上述的大部分损失。阿帕卢萨旗下基金的价格去年下跌了25%，这部分是由于这些基金投资有线电视公司Adelphia Communications所蒙受的损失。
对冲基金Redwood Capital Management的投资组合经理乔纳森?科拉奇(Jonathan Kolatch)说，特普尔的投资者都愿意忍受短期的投资风险，以便能够获得长期的投资回报。科拉奇在高盛公司工作时曾与特普尔是同事。他说，特普尔一旦选中了投资目标，他就不断追加投资，他不为市场上的风风雨雨所动。 特普尔的投资策略就是买进那些最不被人们所看好公司的证券，无论它是美国的、欧洲的、亚洲的还是其他什么地方的公司，而其他投资者往往会对这类公司的证券敬而远之。特普尔说，他不怕亏钱，这正是他的公司与众不同的地方。
过去两周中，他已买进了价值约1亿美元的WorldCom债券(该公司最近更名为MCI)。在该公司被控为了避免向竞争对手付接入费而将通话作手脚后，该公司债券的价格大幅下跌。特普尔的看法是，即使上述指控得到证实，WorldCom不能再逃避交纳接入费，甚至还要承担罚款，该公司的利润也不会受到太大损害，对WorldCom的这一指控不会使该公司的重组计划遭受挫折。
在绩差公司投资者这一小圈子里，如果大量持有某一公司的证券是很难不为人知的。但竞争对手们说特普尔却能玩弄市场于股掌之上，有时他会卖出一种债券的少量头寸，然后把这一消息透露给华尔街，从而拉低这一债券的价格，随即他再逢低买进更多这一债券。
阿帕卢萨资产管理公司的行为方式经常表现得咄咄逼人。
特普尔说，如果需要，他会给你当头一击。
去年，经过激烈对抗，特普尔迫使英国电信公司马可尼通信技术有限公司(Marconi)进行了重组，并改组了公司董事会。阿帕卢萨持有马可尼公司14%的股份。新的董事会规定，如果公司管理层能使股价上扬或能使债务得到清偿，他们得到的将不是奖金，而是车载斗量的公司股票。
1998年，特普尔采取了非同寻常之举，对美林公司(Merrill Lynch)提出了起诉，指控它披露了阿帕卢萨投资橙县(Orange County)债券的保密性细节信息。美林否认了这一指控，两家公司最后达成了庭外和解。
特普尔经常会大量持有一家公司的债权，然后雇佣大批律师作帮手，最终确保他手中的这些债权能够转换成一家重组后公司的大量股票。为了确保他所投资的公司能够进行重组，他也会投入更多资金以推动该公司的一项投资，或对该公司的其他债权人施加压力。阿帕卢萨目前是迈朗公司债权人委员会的联席主席，该委员会目前正在力图使这家处于破产保护中的公司扭亏为盈，这充分反映了特普尔积极进取的投资方式。 特普尔每年仅给其基金投资者一次赎回投资的机会，如果他愿意，他还有权将将投资者40%的投资再保留3年，不过他倒是还从未这样做过。对于那些通常能每股季度甚至每股月就赎回投资一次的对冲基金投资者而言，特普尔定下的这些约束性条款可谓苛刻之极。
但特普尔说他不愁吸引不到投资者。今年迄今为止，阿帕卢萨资产管理公司给予投资者的投资回报已有2亿美元左右，为了缩小基金规模，该公司目前只接受现有客户的新投资。
