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'It's a late-innings game:' Hedge fund billionaire David Tepper says he’s dumped some stocks, and warns of a bear market if Trump's trade war worsens

David Tepper Carolina Panthers

  • David Tepper, the co-founder of Appaloosa Management, said Thursday he had reduced his holdings of US stocks. 
  • "I think it's a late-innings game," he told CNBC of the bull market. 
  • Tepper said that worsened trade relations between the US and China could cause a 5% to 20% decline in the stock market. 

David Tepper, the billionaire hedge fund manager of Appaloosa Management, said Thursday that his firm had reduced its holdings of US stocks.

"If you ask me what inning we're in, I think it's a late-innings game," Tepper, who manages about $14 billion in assets, told CNBC of the nine-year bull market in stocks. 

At issue is the ongoing trade dispute between the US and China. The Trump administration has threatened to place tariffs on all Chinese products entering the country. A $200 billion round of duties that could be announced imminently, and Trump threatened last week to impose import taxes on another $267 billion worth of products.

Additional tariffs would "make it a little bit tough on the market," Tepper said, adding that stocks could drop between 5% and 20% if the trade war worsens. 

"To me, the market is fair-valued if you don't have tariffs on China," Tepper told CNBC. "But if you do have tariffs on China, the question is how high will the dollar go, and then where will earnings be in that case."

Tepper said he had reduced his exposure to US stocks, although he remained long the market. He estimated his fund had around 25% exposure to the S&P 500 after reducing it by about 30%, which has been the wrong move "because the market has been very hot." 

He said he remained bullish on Facebook because the stock was still cheap. 

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