It should be a quieter day in the US markets today due to the stock market closing for Jimmy Carter's funeral. That gives me the opportunity to revisit one of last year's most memorable financial markets TV appearances.
The date was September 26 and the guest was Appaloosa Management founder David Tepper. Since its inception, it has returned about 25% annually, net of fees, which is amazing. With his fortune, he bought the Carolina Panthers NFL team and has largely avoided controversy.
He deserves the benefit of the doubt.
In September, however, he delivered a performance that caught a lot of attention when he went on CNBC and said that he had exceeded his usual limits to load up China stocks, and that he had even more was bought in the previous days after bullish encouragement in China. advertisements.
“This is amazing stuff for that country,” he said of the stimulus. “This has implications for bonds, currencies and stocks.”
“I thought what the Fed did last week would lead to China easing, and I didn't know they were going to bring out the big guns like they did,” he said. “I think there's a whole revolution.”
As to what to buy, he did not discriminate.
“Everything,” he says. “ETFs, I would do futures – everything.
In mid-November however, when the 13F filings were released, they showed it recruiting his Alibaba position, he sold some shares of Baidu and reduced his interest in the FXI China ETF. During his rant, I warned: “The intensity of that pitch makes my spider feel a little like it might be looking for exit liquidity.”
Crucially, it was not good buy-and-hold advice. FXI was trading at $32 at the open on September 26 as its support added to that day's opening gap. It has since fallen 7.8% (although it was certainly a good first week trade).
Now I may not be completely fair here as he almost doubled his position in Q3 in PDD Holdings at prices between $89.17 and $151 (it is now at $100.59) along with a large purchase of JD. com, while Alibaba continued to make up the largest share of its portfolio at 15.76%, despite some sales.
The real test will come on February 14, which is when Q4 13F filings are expected. That's when we'll see what his holdings were on December 31st or if he sold into the rally he helped create.
Again, I wouldn't entirely blame him if he did, not just from a Machiavellian point of view but because facts change. There was widespread enthusiasm for stimulus in September as China finally seemed to be getting the message. Over the next few weeks, it is because it is increasingly clear that Xi was not pulling out the bazooka.
There is eternal hope that Beijing will finally deliver in March (and I think there may be a chance to run that closer to the deadline) but it is getting hard to overcome the dour sentiment in China and taxes will not help.
What is the lesson here?
Now I don't know what Tepper's motives were in coming on CNBC in September and he has been silent ever since. I give him the benefit of the doubt that he was sincere and his portfolio position certainly reflected belief in China. Those stocks he bought are cheap and growing so there was a reasonable basis for buying them, despite the growing divide with the US.
The lesson for everyone else is to be careful when anyone on TV or social media tells you to buy something, especially someone who has the ability to market movement The last one from Bill Ackmanwho certainly has a checkered promotion record.
For every person with honest intentions, there is one who is looking for liquidity to leave. The thinner the market, the higher the risk. Given the meme-ish nature of the markets now, these risks are rising. Pay attention.
