After the Robin Hood Investors Conference last week, Appaloosa Management founder David Tepper sat down with Bloomberg TV to talk about the markets.
On market valuation: He does not think we're in a bubble now as he compared P/E multiples over the last 5 years to the 5-year period running up to the 2000 bubble. Stocks now have seen little change in multiples, while stocks back then saw huge multiple expansion.
On airlines: "Our big play versus the market is the airlines. We're the biggest holder of many of these airlines."
On his 2014 investing approach: "We'll probably stay long. We recently put on a treasury short, to hedge ourselves against the equity markets. Little bit scared of tapering... higher rates... though rates won't go that high."
On to be worried about: "I would be worried if I was a long/short guy and not long enough, that's what I'd be worried about. But I'm not worried, because I am long. But if I'm a L/S guy who can only go 60% long ... the biggest risk for the market is you'll have multiple expansion, higher growth, 10% earnings growth next year, and you'll have another year of 20-30% (performance)."
On J.C. Penney (JCP): "It was a tiny position... a trade and we're done."
On Twitter (TWTR): They would have held Twitter longer, but they had a price target in the $40's and so when the stock hit that in the first days of trading, he exited. "It's a discipline."
On Citigroup (C): "Citi still has some pretty good upside, we think it can make 7 bucks a share."
On his performance this year: "I think gross we're in the 40's (%)."
On tapering: He does think it's time to start tapering. He also said: "There can be a short-term negative reaction. But if you're tapering, it's because there's stronger underlying US growth. And if there's growth, there's going to be higher P/E multiples and the market should be higher. If the market goes down, that's great, it'll be one more opportunity that people will be come and buy."
On what a lower Japanese Yen means: "It means higher P/E multiples in Japanese companies, straight out. That's the way it works, because they're such exporters. So when you have a weaker yen, you have higher earnings."