David Tepper:
How This Hedge Fund Manager Trades
Learn how David Tepper positions his trades and handles risk with this insightful interview.
So, have you ever heard of David Tepper?
If not, let me fill you in with a few quick facts…
- Appaloosa Management Founder: Tepper founded his hedge fund in 1993, making his fortune by betting on distressed assets.
- Contrarian Investor: Known for bold trades, Tepper profited heavily during the 2008 financial crisis by investing in beaten-down bank stocks.
- Billionaire Status: With a net worth of over $18 billion, Tepper is one of the most successful hedge fund managers in history.
- Market Timing Master: Tepper’s ability to identify opportunities in volatile markets has earned him consistent high returns and a reputation as a top investor.
So, he’s a big deal.
Recently, Tepper did an interview on CNBC where he discussed his latest China trade.
And while the “China play” is interesting, what really stood out was how he thinks and positions his trades.
HEDGE FUND TRADING INSIGHTS
Before you watch the video (it’s only 3 minutes long), I’d suggest listening for these three key points:
- The catalyst that prompted his initial trade
- His thoughts on risk limits
- What he needs to see before adding to his position
⇒ Here’s the link
You might be thinking “Who cares? I’m not an investor.”
Fair point, but understanding how big money thinks gives us, as short-term traders, a clearer picture of market movements.
And if we know where the big guys are positioning, we can use that info to time our own trades more effectively.
LAST NIGHT I ADDED MORE
Here are a few standout moments from the interview:
On his initial trade trigger:
“I went over that limit on the Fed.”
Tepper waited for the Fed’s signals before placing his trade, wanting a clearer picture before committing.
On position size and risk:
“The Value at Risk model is what lets me sleep at night.”
Funny!
On increasing his position:
“Last night, I did more.”
He added to his position after a key statement from the Chinese government.
Then he said this:
“I would have another new found limit on a pullback”
This is exactly why buying pullbacks works right? Because big money is waiting to do the same.
Anyway, I thought it was a great clip.
Sure, the China theme is a good trading opportunity (You can trade the China A 50 Index through Pepperstone.)
But more importantly, hearing how a hedge fund titan positions himself around major catalysts gives us a deeper insight into why markets move the way they do.