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The Morning Brief: Big November for Appaloosa’s David Tepper

Appaloosa Management’s David Tepper is back in positive territory with one month left in the year. The Short Hills, New Jersey-based manager’s Palomino Fund jumped 4.50 percent in November, pushing its gains for the year to slightly over 2 percent. The strong return comes on the heels of the fund’s 6.3 percent loss in October, a reminder of the kinds of short-term swings that typically punctuate Tepper’s performance over the more than 21 years he has run his hedge fund. How he fares in December will not only determine whether he makes money, but whether he will hold on to last year’s top spot on the Rich List, when he made $3.5 billion.

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Carl Icahn bought 2.6 million shares of Hertz Global Holdings for $21.36 apiece on December 15, boosting his total stake to 11.34 percent of the total outstanding. The stock surged nearly 6 percent, to $22.55. In September, Hertz agreed to a deal with Icahn, who was given three seats on the board. One month later, Barry Rosenstein’s New York-based Jana Partners boosted its stake in Hertz to 7 percent. Shortly afterward, the hedge fund firm fired off a letter to the board of directors of Hertz urging it to hire former Dollar Thrifty CEO Scott Thompson to fill the open position of chief executive officer.

Icahn on Thursday also reported that he bought more than 1.9 million shares of Navistar International, boosting his stake to 19.99 percent of the maker of trucks, busses and diesel engines.

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Dinakar Singh’s TPG-Axon sold more than 19 million shares of SandRidge Energy over a number of days in the first half of December. It now owns 4.1 percent of the shares, thus falling below the 13D reporting threshold. The New York hedge fund firm also simultaneously filed a 13G, indicating this is a passive investment. In this filing, it reported it also has an economic exposure of another nearly 11.8 million shares, or 2.4 percent of the outstanding, under a basket swap agreement, bringing the total to 6.5 percent.

In March 2013, SandRidge agreed to place four of TPG-Axon’s nominees on the energy company’s board of directors in order to avert a proxy fight. However, since then the stock has plummeted 68 percent, including dropping 7 percent on Thursday. It is also down about 75 percent since June 20 alone, another victim of the global collapse in oil prices.

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Chicago-based Balyasny Asset Management disclosed another two large positions through 13G filings. The hedge fund firm established a 5.31 percent stake in Laredo Petroleum, an independent energy company. It also bought more than 800,000 shares of Penn Gaming, boosting its stake in the operator of casinos and racetracks to 5.74 percent.

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Kenneth Griffin’s Citadel disclosed on Thursday that it took a 5.2 percent stake in James River Group Holdings, a Bermuda-based insurance holding company that went public last week at $21 per share.

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Chicago-based industry tracker Hedge Fund Research calculates that total assets invested in the hedge fund industry rose to a record $2.85 trillion as of the end of November. It reported a net outflow of $1.5 billion so far in the fourth quarter, but said this was more than offset by performance-based gains. We reported yesterday that industry tracker eVestment calculated that total assets topped $3.07 trillion at the end of November. HFR reports that 60 percent of all funds received inflows in the October-November period, while 40 percent experienced outflows.

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