Presentation with David Tepper | 3
I kind of knew I wanted to do investing. I wasn’t sure, I was leaning that way so I kind of knew where I wanted to try to get to. So if you do, just don’t stop driving there. You don’t have to settle. Just keep driving at it and it will come.
You’re very successful, but you must have made some mistakes along the way. Could you share with us one of your biggest mistakes, how you overcame it?
Oh, I made a lot of mistakes. I’ve got to pick which one. I’ll give you one career one from Goldman Sachs. I was at Goldman Sachs, I mentioned, for eight years. When I started there, I started there as an analyst out of Keystone Custodian Funds – mutual funds. I was the ﬁrst outside hire for the junk bond department and I was hired to help start the department.I was there for six months as an analyst and the trading eﬀort was real screwed up, so they moved me into trading and at six months I became the head trader. It’s one of those great stories, I mean, Horatio Alger lives sort of stories, right? So you have Republic Steel, mutual fund, head trader Goldman Sachs – it’s a really nice little story. I was there and I had a pretty good career and I was up for partner pretty fast. I was up for partner, but I was kind of young and they skipped over me. Ten the junk bond market crashed the second time I was up for partner and that didn’t work. But the third time I was up for partner, I had a lot of relationships throughout the ﬁrm and I was making a lot of money. But a funny thing happened on the way to the partnership at Goldman Sachs. Tis guy by the name of Bob Rubin who later was the Secretary of the reasury – he was the head of ﬁxed income when I was there. I liked Bob Rubin because he came previous 100 years of the history of the company. It was a really great time. I’ll tell you a funny story, actually. I was at Republic Steel and I was there probably seven weeks and they did an across the board pay cut of 7 percent. Everybody got out of grad school and talked about what they made. So then, seven weeks after I got out, 7 percent pay cut. I think I got calls from one third of my class. ‘Good choice epper,’ But things kind of work out after a time.
Do you think that, to become a great hedge fund manager 15, 20 years down the road, that that was better than going to Wall Street to start out as an analyst right out of undergrad?
Yeah, I think so. You know what, when you’re starting out, there are no bad choices. Tere are no bad choices right now for you guys. Tere really aren’t; I really do believe that. You just keep driving at what you want and even if you don’t go to Wall Street right away, and you still want to, then you still can go there. Republic Steel to a mutual fund, to Goldman Sachs, I mean this stuﬀ is true. You know what’s funny about you guys now versus me then, or people my age then? You guys are so much more uptight about this stuﬀ. I mean, really, everybody’s uptight. I look at my neighborhood; they’re uptight in high school. SAs and that stuﬀ; much more uptight than we were when we were young.Maybe it’s that much more competitive, but you know what, it’s okay if you don’t know what you want to do exactly right now. It’s not as good if you don’t know what you want to do when you’re 30, but right now, you can be a little confused and try to ﬁgure it out and you can have a lot of diﬀerent paths. in orders to buy the 1/16. Buy at 1/16 and sell at 1/8, buy at 16th and sell at 1/8. And you could just do that. I had it automatically happening; I didn’t have to do anything. 1/16 and 1/8, 1/16 and 1/8. It worked really great, until the market started taking oﬀ and then I went bankrupt basically. So you know, you have to be careful about that sort of stuﬀ.I ﬁrst invested, actually, when I was in high school. I invested in this company called Career Academies because I looked at the stock chart and it was way down from where it was before. I can’t remember what year it was in high school, but I think the stock was trading at two dollars a share. Somehow, I had money saved and I had my dad invest $200 with me. Te company went bankrupt – absolutely wiped out, but maybe that’s why I liked bankruptcies after that (laughter).But if I had a strategy, that was it and that worked really well, because there was nobody else kind of doing it. It just wasn’t a continuous function, it was an anomaly in the marketplace and I actually made more money than I eventually lost.
You started out working at Republic Steel and you went through their whole distress, their kind of downfall, which is where I’m guessing you got very familiar with distressed debt. Do you think that helps you more, or do you think you would have been just as well oﬀ to start with a hedge fund?
You know, it’s an interesting question. I was investing when I was at Equibank. When I was at Republic Steel, it helped me as an analyst, because I was talking to banks and the company was in trouble at the time. I was at Republic Steel only two years and they did more ﬁnancings [when] I was there than the