In a time when hedge funds face regulatory scrutiny and investor ire, David Tepper of Appaloosa Management is trying a softer customer-service policy. The New York Times reports that Mr. Tepper is allowing his clients an early exit from his Thoroughbred Fund. Why would a fund manager do this when it has practically become hedge-fund industry practice to “lock up” investor funds for years at a time?
“We were being nice,” Tepper, the founder of Appaloosa Management, said in a telephone interview. “We let some people out of the lockup, and we replaced it with new money.”
As The Times also points out, Mr. Tepper has the advantage of boasting a 22 percent gain — after fees — in 2010, and that the fund has grown so much that some investors need to make exits simply to rebalance their asset allocations. Not bad.
Mr. Tepper, a fixed-income guy, also took a swipe at equity-focused hedge funds who hold their clients’ money despite their highly liquid holdings: “If you own liquid stocks, you should let people have their money.” No need to be a sore winner, there, cowboy.
mtaylor [at] observer.com | @mbrookstaylor