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Citigroup Inc (C) And The ‘Tepper Rally’

Tepper’s largest holding is Citigroup Inc (NYSE:C). As a major financial, it’s a direct play on the equity market and a broader economic recovery. Although shareholders were absolutely destroyed during the financial crisis, shares of the bank are up nearly 80% in the last year.

Most notably, the bank replaced its former CEO Vikram Pandit with Michael Corbat last October. Corbat has generally been regarded as a more genuine banker, whereas Pandit had his roots in trading and hedge funds.

Analysts at Sterne Agee liked the change, and upgraded shares of the bank to Buy back in January. In a note, they called the switch to Corbat a “game changer.” At the time, Sterne Agee had given Citigroup Inc (NYSE:C) shares a $50 price target, which is roughly where shares are trading at today.

Buy an index fund

A more simple alternative would be to buy an index, such as the SPDR S&P 500 ETF Trust (NYSEMKT:SPY). The ETF is a direct play on the underlying index — the S&P 500 — and should provide good returns for investors if the market continues to power higher.

For those who are more adventurous, a leveraged cousin of SPY might be a more attractive alternative.

The ProShares UltraPro S&P 500 offers a way for investors to juice their returns through leverage. For example, as I write this, the SPY is up roughly 0.85%, whereas the UPRO is up roughly three times as much, better than 2.50%.

Of course, that leverage comes at a price. Holding leveraged ETFs for long periods of time can be deadly, particularly if the market sells off. Traders using leveraged ETFs should be careful to use appropriate stops.

Will Tepper be right yet again?

Many commentators have characterized this rally as the most hated one ever. To be certain, there have been plenty of critics along the way. (David Rosenberg, for example, has stubbornly remained bearish over the last four years.)

But Tepper has been a bull, and at times, the only bull. Will his bullish prognosis prove accurate once again? Or has he simply gotten lucky in recent years?

The article Billionaire Hedge Fund Manager: The Market Can Only Go Up! originally appeared on and is written by Salvatore “Sam” Mattera.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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