Hedge fund manager David Tepper claimed equity markets are not inflated since the US, European and Chinese economies stood on firm ground. Tepper, who runs Appaloosa Management, stated his views in an interview with Stephanie Ruhle of Bloomberg Television at the Robin Hood Investors Conference held in New York.
Tepper said, "I know there's talk about bubbles, this is not one." Although he remained bullish on stocks in the US, Tepper said the markets may experience a decline of 5% to 10% when the Federal Reserve begins to taper its monthly stimulus program. As a hedge fund, he revealed that his company made a recent bet against US Treasuries.
In January, the 56-year old Tepper said investors should have equities in their portfolio since history has shown that they have always been inexpensive. It's also a good time to own equities since companies did not have a lot of debt and the interest rates were low, Tepper had said. Benchmark Standard & Poor's 500 Index had increased 26% so far this year.
Tepper told Ruhle that his gross returns for the year are "well into the 40s." This compared with the average hedge fund returns of 6.9% from January to October, according to data gathered by Bloomberg. Appaloosa Management based in Short Hills, New Jersey, oversees USD 20 billion of funds.
Tepper also holds a positive view of Japan since the benchmark Topix index has exhibited a low price-to-earnings multiple. He also described the banking industry as "interesting" and said Citigroup Inc shares may go up to as high as USD 70. The stock recently closed at USD 51.73 in New York. Tepper, however, did not state when Citigroup's stock would increase. He also said that he has holdings in lenders in the US and Europe. Tepper also revealed that inflation does not bother him since central banks around the world are more concerned with the possibility of deflation.
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