David Tepper has gotten off to a good start this year.

His Appaloosa fund is up nearly 10 percent net of fees while his Thoroughbred fund — which has less of an exposure to equities — is up close to 8 percent.

Tepper won’t comment. Those familiar with the results say the early returns are being driven by his exposure to the equity markets and commercial mortgage backed securities.

At year-end, he had established 13 new equity positions, the largest being Micron Technology, Dean Foods and General Motors. In fact, at year-end, Appaloosa was the second largest holder of Dean Foods, with more than 10.7 million shares.

Sure enough, in the first two months of this year, shares of Dean Foods were up more than 19 percent while Micron surged about 39 percent.

Entering the new year, Tepper also still had a big bet on banks, which helped fuel his triple-digit returns in 2009. In fact, his three largest equity holdings were Citigroup, Bank of America and Wells Fargo.

Those familiar with his portfolio say Tepper, whose bullish comments on CNBC back in September touched off what came to be called the “Tepper rally,” still thinks the US economy is in great shape, in large part because he sees fresh new strong economic data being reported on a regular basis these days, whether they are related to new auto sales or jobs, to cite just two examples.

Even so, Tepper has reduced his risk somewhat in response to recent global political developments. He has taken down his P/E estimate from 15 to 14 1/2 times and at the beginning of March removed all leverage.

Rising oil prices so far are not concerning him. He believes the economy can handle $100 a barrel right now and $110 per barrel in six months, for example, say people familiar with the hedge fund firm.

At this point, he is not worried yet about inflation, although he does believe the day of reckoning has moved closer, to one to two years out now, say sources.

However, he is seemingly most concerned about developments in the Middle East. Tepper is said to be especially concerned about Saudi Arabia. Sources say if the oil fields in Saudi Arabia are burning, Tepper would react to that by selling and going heavily into cash. In general, he is said to believe if the Middle East blows up, you can lose half your money.