David Tepper, the billionaire hedge-fund manager who runs Appaloosa Management LP, said stock markets are not inflated as economies in the U.S., Europe and China are on “firm ground.”
“I know there’s talk about bubbles, this is not one,” he said in an interview with Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference in New York today.
Tepper said that while he remains bullish on U.S. stocks, markets may fall 5 percent to 10 percent when the Federal Reserve curbs its monthly stimulus program. He said his firm recently bet against U.S. Treasuries as a hedge.
Tepper, 56, said in January that investors should own equities because they were historically inexpensive, companies had little debt and interest rates were low. The Standard & Poor’s 500 Index rose to a record this month, gaining 26 percent in 2013.
In today’s interview, he said his gross returns in 2013 are “well into the 40s.” Hedge funds returned an average of 6.9 percent this year through October, according to data compiled by Bloomberg. Tepper’s firm, based in Short Hills, New Jersey, manages about $20 billion.
Tepper, whose holdings include Delta Air Lines Inc. (DAL) and United Continental Holdings Inc. (UAL), said his “big play in the market” is airlines. He said he is optimistic on Japan, where the benchmark Topix index has a low price-to-earnings multiple.
The fund manager said he still holds investments in U.S. and European banks, an industry that he described as “interesting.” He said Citigroup Inc. (C), which closed today in New York at $51.73, may increase to $70 a share, without specifying a time frame.
Tepper said he isn’t worried about inflation as central banks globally are more bothered by prospects for deflation.
He said his firm had sold shares of Twitter Inc. (TWTR), which held an initial public offering this month, at an average of $47, a price “way above” Appaloosa’s target. The stock closed today at $42.06.
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