When David Tepper speaks, markets react. And why not? He is likely the greatest non-quant hedge fund manager of all time. And on Thursday the Appaloosa Management founder spoke indirectly — but optimistically — helping to spark the day’s stock market rally. According to CNBC’s Kate Kelly, Tepper seems to be more comfortable about the market and the macro forces surrounding it than he was just a month or so ago, when his cautionary tone at the SALT conference in Las Vegas spooked the markets.

Kelly pointed out that Tepper was especially worried in April about the European Central Bank, stressing at the time that the ECB needed to ease in June. Well, that’s what it did on Thursday. “He indicated he was pleased by what he saw today,” she said, relaying a phone discussion she had with Tepper. The hedge fund manager, who has topped Alpha’s Rich List for the past two years, also seemed more at ease with the Chinese stimulus policy that has been unfolding in recent weeks, as well as the reduction in the instability in Ukraine and the improving U.S. growth picture.

“He said the bottom line is, all of those things alleviated one by one by one to a certain extent, so…he’s being very, very cautious in what he says, but I read that as I’m a little less nervous,” Kelly told the audience. Hence, Thursday’s bullishness.
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London-based alternatives expert Preqin reports in its monthly research that 28 activist hedge funds were launched in 2013, the highest number since 2007. There have been five so far this year. Activist funds rose, on average, 11.82 percent in 2013, much better than the overall hedge fund benchmark, which returned 7.88 percent. However, Preqin reports that activist funds have exhibited much higher volatility than the average hedge fund over the past five years. “This means that risk-adjusted returns for activist hedge funds are lower than the industry average,” it stresses in the report.
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Preqin also reports what we reported a week or so ago: that activist funds have longer lock-ups than the average hedge fund, at 12 months versus six months for the average hedge fund.
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A bill in the New York State Senate would permit New York City’s five public pension funds to invest more money in hedge funds, private equity and international bonds. The measure would increase the limit on these kinds of investments to 35 percent, from the current 25 percent, according to Bloomberg BusinessWeek. A companion bill in the Democratic-controlled Assembly says the change is needed to enable the funds to meet their annual return targets, according to the report. A new limit “will allow for a superior risk-adjusted portfolio and for additional flexibility to reduce portfolio volatility while maintaining superior returns,” according to a memo accompanying the Assembly measure.