Leon Cooperman, Omega Advisors

By Travis Johnson, Stock Gumshoe, September 8, 2014

These are my notes and instant reactions from a presentation at the Value Investing Congress, the notes below might contain errors, paraphrases, incorrect quotes, or misinterpretations.

Leon Cooperman is probably known to most of you, he may well be the biggest “CNBC name” at today’s session — he runs Omega Advisors, a $10 billion partnership/hedge fund, and you can see some of the recent additions/subtractions in the highlights from their last 13F.

Cooperman’s basic point is that equities are still the best house in the financial asset neighborhood… but he doesn’t have a lot of “hot stocks” because the market is pretty fully valued.

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Overall view:

There is time and price left in the bull market — still expects a respectable return over the next 18 months. Fairly valued, not “priced to perfection.” Nearly all fixed-income securities look terrible in the U.S., with expectations of negative returns in Treasuries, US corporates and high yield. Europe and Japan may well outperform the US over the next year because they’re further behind. The dollar should be a strong currency over the next year

Money managers are still underinvested, and there’s still too much cash floating around.

We’re starting to enter optimism but are far from euphoria, which means the bull market should have quite a while to run.

Business cycles tend to repeat themselves — the 2007-2009 bear market and the recession both were much worse (roughly twice as bad) and lasted much longer (1.5X longer) than typical bear markets/recessions.

The average recovery lasts about five years, which is exactly where we are now — but the recession was long and things are still recovering.

Bear markets come from speculative bubbles bursting or from anticipated recession, neither seems likely to him within his forecast horizon (next year or so).

Short of exogenous events or global shocks, everything is going gradually in the right direction.

And don’t fear raising rates — on average, the stock market peaks 29 months after the Fed starts raising rates. People will go nuts when the Fed first raises, but they’re wrong — raising rates are positive, not negative. The market also peaks about 7 months before the business cycle peak — which is not foreseen yet.

Fixed income is mispriced generally — just not attractive, which is why equities are still the ...

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