Appaloosa's Tepper aids analyst in starting firm

BOSTON (Reuters) - Hedge fund manager David Tepper, among the $2 trillion industry’s most closely watched investors, is helping start a new firm -- one run by an employee.

Matthew Knauer, a senior analyst at Tepper’s $16 billion Appaloosa Management, filed incorporation records in New York last month to launch Nokota Management with Mina Faltas, who had been an analyst at $14 billion Viking Global Investors LP, sources familiar with the matter said.

Knauer and Faltas, both in their early 30s, are part of new generation of would-be managers who trained as analysts with some of the industry’s most successful fund managers and are now setting off on their own, often with financial help from their professional parents.

Appaloosa and Knauer did not respond to emails seeking comment and a spokeswoman at Viking Global declined to comment.

Knauer and Faltas both covered tech, media and telecoms for their respective funds.

Tepper, whose bet that financial firms would recover helped him deliver triple-digit returns to his investors and earn himself a record-shattering $4 billion payday in 2009, is putting some of his money into Nokota, sources familiar with the matter said. Last year, the 53-year-old manager’s appearance on cable television helped spark a stock market rally when he declared the U.S. economy to be in great shape.

His double-digit returns and plain-spoken manner during more-frequent public appearances at conferences and on television have turned Tepper into a closely watched arbiter of economics and markets.

As his own popularity rises, however, he has worried about becoming too big and has made noise about limiting the size of his portfolio. At the same time, he has hinted at plans to help newcomers, helping seed the next generation of possible stars.

Indeed, this is not the first time Tepper has been generous to a new manager. In 1995, the Chatham, New Jersey-based manager loaned office space to Daniel Loeb, who launched his now highly successful $5.7 billion Third Point with just $3.3 million.

But Tepper's firm has also had a run-in with regulators, as they crack down more vigorously on Rule 105 short-sale violations, for example. Last year, Tepper's firm paid a $1.3 million penalty to settle a short-sale investigation involving an offering of shares by Wells Fargo & Co WFC.N.

Knauer, like his boss, stuck with strong animals when selecting the name for his firm. Nokota is the name of a feral and semi-feral horse breed found in the badlands of southwestern North Dakota while Appaloosa is a horse breed known for its colorful leopard-spotted coat pattern.

Additional reporting by Matthew Goldstein, editing by Gerald E. McCormick