02/05/2014

Tepper Plans to Invest in New Fund of Funds

A fund of funds being set up by Wall Street veteran Stephen L. Weiss appears to have won substantial backing from Appaloosa Management founder David Tepper.

One source said Tepper has agreed to invest more than $25 million of his own money with Weiss’ firm, Short Hills Capital of Maplewood, N.J. Other sources, however, said Tepper is still mulling a commitment.

Weiss, an investment-book author and CNBC commentator, plans to begin investing on March 1. In addition to Tepper’s money, the Short Hills vehicle would start out with a portion of Weiss’ personal wealth and capital from a few other outside investors.

Weiss initially will deploy capital to 10-12 funds, primarily run by long/short equity managers, and eventually expand the portfolio to 15-20 investments. He’ll target both large, established firms and emerging managers with track records of at least two years.

Tepper has backed a slew of single-manager fund launches over the years — mainly by managers who previously worked at Appaloosa. Most recently, he committed an undisclosed sum to Alder Hill Capital, a new fund operation led by a former senior analyst at Appaloosa, Eric Yip, and a former CQS portfolio manager, Mark Unferth.

Tepper’s interest in Short Hills apparently stems from his relationship with Weiss, who has long worked in Short Hills, N.J., where Appaloosa is headquartered. During the 2004-2007 period, Weiss co-led a long/short equity shop in Short Hills called MSW Asset Management. Earlier, he made a name for himself as an equity analyst at Salomon Brothers, where he fed research to SAC Capital, Soros Fund Management, Tiger Management and other hedge fund stars. He did a brief stint at SAC and later worked at Lehman Brothers before starting his own firm.

At Short Hills, Weiss is joined by two analysts and two operations staffers. He soon plans to hire a chief financial officer/chief operating officer.

In addition to regular appearances on CNBC, Weiss has written two investment books, including “The Billion Dollar Mistake: Learning the Art of Investing from the Missteps of Legendary Investors,” published in 2010.

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