John Paulson made a fortune while others suffered by betting heavily on the collapse of the mortgage market. In a year, he went from being a so-so hedge fund manager to a rockstar God among Gods.
This week, the world learned of David Tepper’s monster bet in 2009, when he made billions buying bank debt earlier this year, strictly on the belief that the government would intervene in the market, and that lenders would not be forced to take a haircut.
Already there are comparisons being made between him and Paulson, and like Paulson he deserves credit for going all-in. Yesterday The Guardian reported that he made big bets on Lloyds and RBS, making the same bet in the UK (where there was some concern that the government wouldn’t ahve the funds to bail out its big banks, given their size relative to GDP).
But don’t expect Tepper to achieve rock star status.
We can stomach someone betting on the subprime debacle, even if it screwed the rest of us. After all, there’s a nice moral of the guy realising that the rest of the world had gone insane, and that he had a good opportunity to take money from the bankers and traders that got us into this mess.
But most people just won’t be able to abide by a bet that was totally predicated on a government bailout — our tax dollars helping him earn $7 billion in a year.
It was a great bet, and hats off to him for realising what in hindsight was blindingly obvious — duh, of course the government didn’t let anyone fail after Lehman! — but it’s not the kind of move that will make him friends or get him invited to parties.
But with $7 billlion in profit, we think he’ll be just fine.