Hedge fund titan to pocket $3B for 2013

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GDBryan
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Hedge fund titan to pocket $3B for 2013

Post by GDBryan »

http://nypost.com/2013/12/29/hedge-fund ... -for-2013/

The important phrase here is: "Tepper’s Palomino fund was up 38 percent, after fees, as of Nov. 30, according to an investor, making the 56-year-old one of the few in his business to post a return higher than the 29.1 percent gain of the S&P 500.

Happy New Year!
Kircheis
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Re: Hedge fund titan to pocket $3B for 2013

Post by Kircheis »

So, after the usual 2 and 20 fee, the investor would have had the same return as investing in a low cost S&P 500 index fund?
DoWahDaddy
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Re: Hedge fund titan to pocket $3B for 2013

Post by DoWahDaddy »

um, no.
"I've worked in the private sector. They expect results." - Dr. Raymond Stantz
Rodc
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Re: Hedge fund titan to pocket $3B for 2013

Post by Rodc »

Kircheis wrote:So, after the usual 2 and 20 fee, the investor would have had the same return as investing in a low cost S&P 500 index fund?
DoWahDaddy wrote:um, no.
How are hedge fund returns reported?

If this is before fees, and the investor earned (38% - 2%)x80% then the investor earned 29% and matched the S&P 500.

If the 20% comes off the entire 38% it would be a little less than 29%.

If some or all of the fees are already accounted for then the hedge fund investor beat the S&P 500.

Not being a hedge fund investor I have no idea how the fees are accounted for.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
Kircheis
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Re: Hedge fund titan to pocket $3B for 2013

Post by Kircheis »

Rodc wrote:
Kircheis wrote:So, after the usual 2 and 20 fee, the investor would have had the same return as investing in a low cost S&P 500 index fund?
DoWahDaddy wrote:um, no.
How are hedge fund returns reported?

If this is before fees, and the investor earned (38% - 2%)x80% then the investor earned 29% and matched the S&P 500.

If the 20% comes off the entire 38% it would be a little less than 29%.

If some or all of the fees are already accounted for then the hedge fund investor beat the S&P 500.

Not being a hedge fund investor I have no idea how the fees are accounted for.
Actually, I see now that the article says 38% after fees.
MindBogler
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Re: Hedge fund titan to pocket $3B for 2013

Post by MindBogler »

GDBryan wrote:http://nypost.com/2013/12/29/hedge-fund ... -for-2013/

The important phrase here is: "Tepper’s Palomino fund was up 38 percent, after fees, as of Nov. 30, according to an investor, making the 56-year-old one of the few in his business to post a return higher than the 29.1 percent gain of the S&P 500.

Happy New Year!
Calm Man
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Re: Hedge fund titan to pocket $3B for 2013

Post by Calm Man »

Kircheis wrote:So, after the usual 2 and 20 fee, the investor would have had the same return as investing in a low cost S&P 500 index fund?
Ah yes, but you would have helped make this man rich which is very important. One has to be brain dead to put money with those people. I have stopped charitable giving to my former university and medical school with a letter and email to each indicating that as long as a nickel is invested in hedge funds they will not get a nickel from me. I received a thank you for my message and indication that hedge fund investment is part of a diversified portfolio. Good for them.
Bracket
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Re: Hedge fund titan to pocket $3B for 2013

Post by Bracket »

Isn't Vanguard Small Cap Value index admiral up like 36% year to date? Can I get 2 billion for investing in that?
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Ged
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Re: Hedge fund titan to pocket $3B for 2013

Post by Ged »

Bracket wrote:Isn't Vanguard Small Cap Value index admiral up like 36% year to date? Can I get 2 billion for investing in that?
Tepper bet heavily on airlines. Yikes.
Rodc
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Re: Hedge fund titan to pocket $3B for 2013

Post by Rodc »

Kircheis wrote:
Rodc wrote:
Kircheis wrote:So, after the usual 2 and 20 fee, the investor would have had the same return as investing in a low cost S&P 500 index fund?
DoWahDaddy wrote:um, no.
How are hedge fund returns reported?

If this is before fees, and the investor earned (38% - 2%)x80% then the investor earned 29% and matched the S&P 500.

If the 20% comes off the entire 38% it would be a little less than 29%.

If some or all of the fees are already accounted for then the hedge fund investor beat the S&P 500.

Not being a hedge fund investor I have no idea how the fees are accounted for.
Actually, I see now that the article says 38% after fees.
So does the OP> :oops:
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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InvestorNewb
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Re: Hedge fund titan to pocket $3B for 2013

Post by InvestorNewb »

When the market is up everyone does well, including hedge funds.

All that matters is whether he can beat the market consistently over time.The research says it's virtually impossible, so I'll stick with index funds.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
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LAlearning
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Re: Hedge fund titan to pocket $3B for 2013

Post by LAlearning »

I was under the impression VFINX (Van S&P 500) was up 31-32% YTD... I guess there is still 1 trading day left to settle this....

Quick, jump into that hedge fund!
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DoWahDaddy
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Re: Hedge fund titan to pocket $3B for 2013

Post by DoWahDaddy »

Just fyi, HFs are not permitted to disclose gross returns, unless also showing net returns in the same disclosure. So if you see one return, you can assume it's net. Or that they are playing with fire. The SEC doesn't mess around with performance disclosures.

Also, while it's as pointless as discussing religion and politics, HFs are not comparable to long-only stock or bond funds. They are diversifiers that give you access to revenue streams and risk profiles that are distinct from any other asset class. Finding good ones is no easy task, which is why only endowments and other institutions can allocate enough resources to make the effort potentially worth while.
"I've worked in the private sector. They expect results." - Dr. Raymond Stantz
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TheTimeLord
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Re: Hedge fund titan to pocket $3B for 2013

Post by TheTimeLord »

GDBryan wrote:http://nypost.com/2013/12/29/hedge-fund ... -for-2013/

The important phrase here is: "Tepper’s Palomino fund was up 38 percent, after fees, as of Nov. 30, according to an investor, making the 56-year-old one of the few in his business to post a return higher than the 29.1 percent gain of the S&P 500.

Happy New Year!
Tepper has been amazing for years.


Billionaire David Tepper's hedge fund, Appaloosa Management, reported in a letter to investors that it returned 16.8% in the first half of 2013, outperforming the S&P 500. This continues Tepper's record of strong returns for his investors, with net annualized returns of 28% over the last 20 years.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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Robert T
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Re: Hedge fund titan to pocket $3B for 2013

Post by Robert T »

StarbuxInvestor wrote:Billionaire David Tepper's hedge fund, Appaloosa Management, reported in a letter to investors that it returned 16.8% in the first half of 2013, outperforming the S&P 500. This continues Tepper's record of strong returns for his investors, with net annualized returns of 28% over the last 20 years.
Yes, due credit to Tepper. If I recall he was one of the first large investors in Banks (his primary holdings) while everyone was fleeing in 2008 (including in European banks e.g. Ireland).

Over the last 20 years S&P500 annualized returns = 9.2%. $10,000 invested in S&P500 vs. with Tepper 20 years ago would have grown to the following:

S&P500: $58 thousand ($10,000 compounded at 9.2% for 20 years)
Tepper: $1.4 million ($10,000 compounded at 28% for 20 years)

Good for him, and good for his investors. Just one (big) caveat - this does not account for taxes - which were likely much larger with Tepper.

The power of compounding at a higher rate.

FWIW - he doesn't think US equity markets in are in a bubble, and thinks US stocks will have another relatively good year in 2014 (as of interview in Nov. 2013). But who knows ...

Robert
.
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TheTimeLord
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Re: Hedge fund titan to pocket $3B for 2013

Post by TheTimeLord »

Robert T wrote:
StarbuxInvestor wrote:Billionaire David Tepper's hedge fund, Appaloosa Management, reported in a letter to investors that it returned 16.8% in the first half of 2013, outperforming the S&P 500. This continues Tepper's record of strong returns for his investors, with net annualized returns of 28% over the last 20 years.
Yes, due credit to Tepper. If I recall he was one of the first large investors in Banks (his primary holdings) while everyone was fleeing in 2008.

Over the last 20 years S&P500 annualized returns = 9.2%. $10,000 invested in S&P500 vs. with Tepper 20 years ago would have grown to the following:

S&P500: $58 thousand ($10,000 compounded at 9.2% for 20 years)
Tepper: $1.4 million ($10,000 compounded at 28% for 20 years)

Good for him, and good for his investors. Just one (big) caveat - this does not account for taxes - which were likely much larger with Tepper.

The power of compounding at a higher rate.

FWIW - he doesn't think US equity markets in are in a bubble, and thinks US stocks will have another relatively good year in 2014 (as of interview in Nov. 2013).

Robert
.
Yes, I remember seeing him on CNBC back in May-June when the market got jittery about the possibility of a taper. He was a total bull and it served him very well. Tepper, David Swensen and Jeffrey Gundlach are to me the greatest investors of our day.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
pingo
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Re: Hedge fund titan to pocket $3B for 2013

Post by pingo »

For the kinds of investors using his hedge fund, with the tax brackets they must have, I'd be curious how after-tax returns using the S&P 500 or Total Stock Market compare to after-tax haircut their returns would have received over the years. I'll assume the hedge fund wins, but I wonder how close the race would have been.

Also, here's one of my favorite, short reads involving hedge funds: The Tao of Alpha.
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