Smart Hedge Fund Manager Says Time To Reduce Your Long Position

David Tepper is a man that gets a lot of respect. He is the founder of hedge fund Appaloosa management, and specializes in distressed companies and special situations. Tepper has been enormously successful, generating returns that far exceed market averages, and is one of the 25 highest earning hedge fund managers and top 166 richest people in the world. When he talks about the market, people listen. Talk he did at the recent SALT conference.

Tepper indicated that he is “nervous” that the stock market may be getting dangerous. He did not indicate to go short, just “not to friggin long.” In a recent SEC13F filing, Tepper indicated that Appaloosa management cut its stake in the SPDR S&P 500 ETF by over $6 million. Tepper also indicated that he bought new positions in Facebook, Expedia, Priceline, and Haliburton. Tepper liquidated positions in Transocean, Foster Wheeler, EMC Corp, Hartford Financial, Fluor. He also sold 2.8 million shares in MGM Resorts International.

The Skybridge Alternatives Conference facilitates balanced discussions and debates on macro-economic issues, geopolitical events, and alternative investments. Keynote speakers at the conference include such well known thinkers as former presidents Bill Clinton and George W. Bush. Other notable speakers include Tony Blair, former English Prime Minister, and former Vice President Al Gore. Skybridge Capital is a global alternative investments firm with $9.6 billion under management.

Be cautious is Tepper’s advice. But he still remains heavily invested in the market. His second largest position is His second PowerShares QQQ Trust, which tracks the Nasdaq. That position was worth $815 million. Tepper clearly does not believe that the market is heading south. Tepper is a veteran of Goldman Sachs who founded Appoloosa management after heading Goldman Sachs high yield desk for eight years. Appalossa frequently buys the stocks of distressed companies and profits from them when they rebound.