BOSTON (Reuters) – Billionaire David Tepper plans to turn his hedge fund Appaloosa Management into a family office where he will invest his personal fortune and return capital to outside clients at some point, a person familiar with his plans said on Thursday.
Appaloosa, which was founded by Tepper, has gained an average of 25% each year for more than a quarter century and manages $13 billion in capital.
Tepper, 61, is one of the $3-trillion hedge fund industry’s most closely watched fund managers, having earned billions when he bet on banks during the tail end of the financial crisis.
His decision to stop managing money for clients comes at a challenging time for hedge funds and as some other prominent managers, including Highfields Capital Management’s Jon Jacobson, have announced plans to scale back and concentrate on managing their personal fortunes.
Lackluster returns and lofty fees charged by hedge funds have prompted investors to head for the exits, and they withdrew $15 billion in the first quarter, according to eVestment data, in a fourth straight quarter of redemptions.
A year ago, Tepper bought the National Football League team, the Carolina Panthers, joining other prominent investors, like Avenue Capital Group’s Marc Lasry, who have bought sports teams.
For years, Tepper has been careful about not letting his fund grow too large and has periodically sent cash back to his investors, often at the end of the year.
Now, he is finalizing plans to give it all back, though he has yet to decide on the timing.
The Wall Street Journal first reported the news.
Reporting by Svea Herbst-Bayliss; Editing by Bernadette Baum