Hedge fund billionaire David Tepper is "not as bullish" as he has been in the past.
"I'm not probably as bullish as I could be, because I have problems with earnings growth. I have problems with multiples. I have problems with all kinds of problems, so I can't really call myself a bull," Tepper told CNBC.
Tepper called the stock market environment "challenging."
Tepper said it is “probably not a bad idea” to take money off the table, adding that he has lots of cash right now, amid the uncertainty of a Federal Reserve rate hike.
"If you're the average guy, over time, you won't do well in the stock market. We're not talking about crashes here, massive misvaluations. We're talking about a market that should correct. The question is at what level?"
He noted that if the market fell 20 percent, he would be a buyer.
“We’re not talking about crashes here,” he said. “We’re talking about a market that should correct.”
While down from a five-year high in July, the Standard & Poor’s 500 index’s price-earnings ratio of 17.2 times annual profit is still above its 10-year average of 16.5. This is when companies in the index just saw quarterly earnings drop for the first time since 2009, Bloomberg News reported.
"We have some longs and shorts and we're hedged in, but we don't have a huge equity book right now," said Tepper, founder and president of Appaloosa Management, which currently manages more than $20 billion, CNBC reported.
He said world economic growth is looking lower at a time when the Fed appears to be ready to raise interest rates while most other central banks are easing, CNBC explained.
"The United States is not held hostage by the global economy. The U.S. stock market … which is 50-50 U.S. and the rest of the world is not the U.S. [economy]," Tepper said.
He said the U.S. economy is “fine.”
Appaloosa, a credit fund, has gained 12 percent this year through August,
according to a person with knowledge of the firm. Hedge funds have returned 2.2 percent during the period, according to data compiled by Bloomberg.
Tepper said Apple Inc. shares are “cheap” because the company has lower multiples, though he warned that its exposure to China is problematic.
He said his Apple stake accounts for less than 1 percent of his portfolio. The shares rose 2 percent to $112.39 at 12:48 p.m., gaining 1.8 percent for the year.
Tepper said his hedge fund sold its stake in Alibaba Group Holding Ltd., the Chinese Internet firm, by July.
Tepper said Chinese policy makers were making mistakes and that they are on a learning curve as the country transitions to a market economy. China’s surprise devaluation of the yuan last month triggered a rout in global stocks.
Tepper, a former credit trader at Goldman Sachs Group Inc., started his Short Hills, New Jersey-based hedge fund in 1993.
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