Tepper School of Business benefactor and hedge fund manager David Tepper visited his alma mater in early October to address undergraduate and graduate students and exchange perspectives on subjects ranging from career advice and fatherhood to investment insights. The founder and president of Appaloosa Management - one of Wall Street’s most successful hedge funds according to Institutional Investor’s Alpha magazine - made an unplanned stop to the Pittsburgh campus to personally welcome students as part of the kick-off to the academic year.
Reputed to be direct, charming and provocative – as well as a brilliant investor and trader, Tepper did not disappoint.
“He is very down to earth. He connected very easily with students,” said Vishwa Kolla, 31, a first-year MBA student who developed high-tech products before business school.
Tepper, a 1982 MBA graduate, began his talk with a review of markets – both for investments and for jobs – and his passion for the Carnegie Mellon business school, which assumed his name in 2004 when he and his wife Marlene gave a generous $55 million gift.
“This is a great school,” he told the audience of PhD, MBA and business and economics undergrads. As for the Tepper School graduates' reputations on the Street: “They’re smart, they’re well trained and they work hard. That’s a good thing.”
In describing where he thinks financial markets are headed, Tepper predicted the shakeout (now underway) among investment banks, perhaps a takeover or merger, and predicted almost certain layoffs in the area of structured debt products. At the same time, he also said new investment products would be created, fueling demand for new hires.
Heading off the common question of "what about me" in regard to students' curiosity regarding market volatility, Tepper said, “You’re getting a great education, you’ll be fine.”
Tepper, whose market experience includes the Asian and Russian debt crises of the 1990s criticized some sub prime mortgage lenders – blamed for contributing to a global credit crunch – as possibly predatory. He suggested some banks could be on the hook to borrowers who have no recourse with middlemen lenders now out of business.
He described his own position as not too long or too short in the current volatility, and said he continued to be a value investor, interested in long-term gains, fundamental analysis and opportunities in distressed sectors. Tepper also said he’s investigating worldwide money flows and has taken a position in Euros – a new area for him.
Tepper said his success comes in part from challenging convention. But shared candid advice based on his early years in the financial services industry, when recounting a story in which he failed to appreciate the importance of office politics when he worked at Goldman Sachs.
Asked to describe his proudest moment, Tepper responded by saying he was proudest of raising three good, grounded children, two of whom are now in college. “It was easier when they were younger. It’s harder now when they open the paper and see how much money I make.”
While the audience laughed, Tepper, whose success places him among the world’s wealthiest men (according to the 2007 Forbes list of billionaires), also urged students to maintain high ethical standards and avoid over-emphasis of the bottom-line.
“Over time, I think you just treat people right, run your business right, your life right – it’s the whole package,” he said, in response to a question about how to build a sustainable business.
As students filed out of the auditorium following the session with Tepper, first-year MBA student Tuesday Tibbs, 22, of Baltimore, said: “He was very candid, very frank, and I enjoyed the lesson in challenging convention in business. He clearly came with a purpose to teach.
“I also enjoyed hearing how to avoid mistakes,”added Tibbs, who entered the Tepper School directly from Hampton University, where she earned degrees in accounting and business administration.