Bloomberg – David Tepper often throws a $20 bill on the floor when he’s weighing a big investment with analysts at Appaloosa Management LP.
“Would you pick that up?” Tepper, founder and president of Appaloosa, asks them. His point: The best trades can be like found money.
That was the case in early 2009, he says. Shares of banks such as Citigroup Inc. and Bank of America Corp. were collapsing on rumors they would be nationalized. On Feb. 25, the U.S. Treasury put out a white paper and a term sheet on its Web site for the government’s Capital Assistance Program. They said the preferred stock the government was buying in the banks would be convertible to common shares at prices far above where they were trading — 37 percent higher in the case of Citigroup and 21 percent for Bank of America, according to Bloomberg calculations.
