Tepper’s sister thinks he should get security with his increased exposure, an idea he scoffs at. “No one gives me any trouble,” he snorts, bulking up his ex-football-player shoulders. He’s been targeted in other ways, though: In July, the Securities and Exchange Commission, lately on the lookout for obvious targets to make an example out of, zeroed in on a trade Appaloosa made in November 2008 in which it sold short Wells Fargo stock (effectively assuming the position that the bank would fail) then bought it back five days later at a reduced price. In a letter to investors, Tepper denied “knowingly” manipulating the price of the stock in order to get a deal on it, but he still ended up paying a $1.3 million penalty.
Everyone has an idea of what Tepper should do with his recent windfall, from his family to Warren Buffett and Bill Gates to obscure societies. “My favorite is the Loch Ness Monster Society,” he says. “Like, can you support research into the Loch Ness Monster? The Loch Ness Monster!”
He’s also been getting a lot of letters from kids asking him to pay their college tuition. “I’m gonna have somebody put together a form letter for that,” he says. “It’ll say something like, I’m going to give you a great gift. What I got: Nothing.”
The backstories of Wall Street power players usually contain some element of hardship, some kind of experience that gives a context to their shameless drive to pursue wealth beyond reason: Goldman Sachs’ Lloyd Blankfein grew up in the Linden projects in Brooklyn. Philip Falcone shared a three-bedroom house with eight siblings while his mother slaved at the local shirt factory. George Soros had to hide from the Nazis.
David Alan Tepper’s childhood was just average. Born in 1957, he grew up in Stanton Heights, a middle-class section of Pittsburgh. His father, an accountant, was preoccupied by a certain amount of financial angst, but then, he had three children. David, the middle child, played football and memorized the baseball statistics on the backs of cards given to him by his grandfather—early evidence of what he claims is a photographic memory. “He was analytical,” remembers his brother, Scott. “We had a railing on our porch, and he would be like, ‘If I put my head in there, would I get stuck?’ ”
He also distinguished himself as a wisecracker, a guy’s guy, a reputation he maintained throughout his time at the University of Pittsburgh and then at Carnegie Mellon, where he regaled classmates in the M.B.A. program—now called the David A. Tepper School of Business—with his Elvis impressions during the annual student follies.
“He was kind of a character,” says his classmate Rich Goldberg. “He had a huge amount of self-confidence, and he was pretty irreverent.”
He planned, as a child, to be rich. “I’m going to be a millionaire before I’m 30 years old,” he used to say, according to his sister. He wasn’t, though he was making six figures as a trader at Goldman Sachs in New York, where he had transferred from Boston. His future wife, Marlene, would soon join him, much to the chagrin of her family: Her sister wrote her a letter warning her David might be after her money.
Tepper landed in New York in the mid-eighties, at the heart of the junk-bond boom. Goldman Sachs was late getting into the business when the firm moved Tepper onto the desk. “They saw it as kind of unsavory,” says Jonathan Kolatch, who worked alongside Tepper and now runs a hedge fund, Redwood Capital Management, in nearby Englewood Cliffs. His analytical mind gave him an edge; he could see value in ailing companies where others couldn’t.