Appaloosa Management’s David Tepper spent an hour or so on CNBC on Wednesday morning. But it was not one of those typical market-moving appearances for the iconic hedge fund manager. Tepper, of course, is the best-performing hedge fund manager among those that rely on humans to make investment decisions as opposed to computers. He manages $17 billion, and last year his main fund returned 4 percent to 5 percent. Like many investors, Tepper is excited that with the Republicans controlling the White House and both chambers of Congress, economic growth will kick up and there will be no new regulations. He is also counting on significant tax cuts. “You can’t be short” in that environment, he said. “I’m not suggesting the market is really cheap, but listen, it’s hard to go short when you still have the ‘drugs’ being given.” Tepper also thinks if the populist candidate loses the French elections, the markets will enjoy another big boost.
However, in this environment he is looking for inflation to pick up and therefore the Fed to raise interest rates. This means he is shorting the bond market. “Bonds are hard to own,” he told the audience. “Yields are really low.”
He also said he is long European equities, which he suggested offered more value, asserting the U.S. market multiple is “kind of full.”
However, when pressed by the interviewer, Tepper conceded he has more overall exposure to U.S. equities. As for individual stocks, he says he still owns about 80 percent of his earlier position in drug maker Allergan, selling some when the stock ran up to $240 or so. He displayed angst over his position in generic drug maker Teva, but allowed it “looks cheap right now.” He also lamented trimming his position in Apple in the fourth quarter, explaining he feared President Trump’s China-bashing might hurt the maker of the iPhone and iPad. Tepper also said he bought Snap in the initial public offering. He sold in the high $20s but said if it drops to near its offering price of $17, he would consider buying it again.
Tepper also implied there are a number of non-business related issues that he is concerned about regarding Trump. But stressed he did not want to get into it. And in typical Squawk Box fashion, he of course was not pressed on that.
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Jeffrey Smith’s Starboard Value sold more than 900,000 shares of Brink’s, reducing its stake to 3 million shares, or 6.1 percent of the total outstanding. In late February, the activist had sold 650,000 shares. The stock is up about 26 percent this year after gaining nearly 40 percent last year.
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Marcato Capital Management made public a 16-page report that rails at the management and board of Buffalo Wild Wings, stressing that since it went public in 2003 no executive and just one director on one occasion bought stock in the open market.
“In our view, this lack of long-term ownership has contributed to failures of governance and oversight, poor capital allocation discipline and the severe lack of urgency in navigating the difficult operating environment,” the activist states. “Shareholders deserve a Board and management team that is willing to commit its own capital alongside them.” Shares of Buffalo
Wild Wings Wednesday fell 1.4 percent, to close at $154.25. The stock is now down nearly 12 percent from its December 9 high.
