David Tepper and Co.: Which traders profited most from the downturn?
David Tepper reaped $7 billion in profit for his firm by scooping up bank stocks at their nadir. How does that stack up with other lucrative moves?
David Tepper wasn't the only person who turned the economic downturn into an unbelievable windfall. But few made a bigger splash than he did with the $7 billion profit he made for his firm or the $2.5 billion he earned for his personal portfolio in 2009.
Mr. Tepper did it by scooping up the stock of crisis-battered financial institutions like Citigroup and Bank of America when they drooped to a few dollars (or in Citi's case, under a dollar) per share early this year, according to the Wall Street Journal. He bet – correctly – that the federal government wouldn't let them go the way of Lehman Brothers.
How does that compare with other supertraders? Here's a look at the three highest-paid hedge-fund managers of 2008 and their strategies to rake in big profits that year.
At the top of the list is James Simons of Renaissance Technologies Corp., who pulled in $2.5 billion in 2008, according to Alpha Magazine in March. Mr. Simons generated an eye-popping return of 80 percent through rapid-fire trading, an approach driven by sophisticated computer models and raw technological power to rapidly capitalize on opportunities. That return is a must given Simons' industry-leading fees of 44 percent on profits and a 5 percent management fee.