More on David Tepper, and the Best Performing Hedge Funds of 2009
Via Bloomberg. Excerpt:
Shares of banks such as Citigroup Inc. and Bank of America Corp. were collapsing [in early 2009] on rumors they would be nationalized. On Feb. 25, the U.S. Treasury put out a white paper and a term sheet on its Web site for the government’s Capital Assistance Program. They said the preferred stock the government was buying in the banks would be convertible to common shares at prices far above where they were trading -- 37 percent higher in the case of Citigroup and 21 percent for Bank of America, Bloomberg Markets reported in its February 2010 issue.
For Tepper, 52, that meant it was time to buy. “If the federal government was putting out this paper, they weren’t going to nationalize the banks,” he says.
Second, the conversion price of the preferred shares meant the bank stocks were seriously underpriced.
“It was crazy,” says Tepper, a Pittsburgh native. “In February and early March, people were in a panic.”
(Thanks to Nadav Manham for the article link.)