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Billionaire Leon Cooperman Interview –“We Live in Abnormal Times”, But The Stock Market Is Still In Its “Zone of Fair Value”

Nina Zdinjak

The Omega Advisors chairman and CEO, billionaire Leon Cooperman, recently was a guest at CNBC’s "Squawk Box", and he shared his observations on the current market trends. In the interview, he pointed out that we live in abnormal times alluding to $12 trillion-plus of sovereign debt that has a negative interest rate. He explained further that if we borrow money to Switzerland, or Germany, for 10 years, they are going to return us less than we actually gave them.

Nevertheless, in this abnormality, according to Cooperman, the stock market is currently in its “zone of fair value”. Only if it goes higher, if S&P 500 reaches 3,100 in the near term, that could signalize the market “knocking on the door of euphoria”, which could later on lead to the end of the bull market, as he referred to Sir John Templeton, who said: “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.” When asked about what is needed to correct that, if the bear market is the answer, Cooperman replied that bear markets happen for several reasons, like the anticipation of recession or when the Fed becomes unfriendly, both which don’t seem to be the current cases. If anything, the Fed has been too easy, and monetary policy “inappropriate”, according to Cooperman.

Billionaire Leon Cooperman Interview –“We Live in Abnormal Times”, But The Stock Market Is Still In Its “Zone of Fair Value”

He also discussed IPO market and said that he finds the IPO market “a little bit of bubble”, with many companies there having no earnings, pointing out further that we shouldn’t generalize but instead go name by name. “The valuations are not unreasonable in the aggregate, you have to look at each company one at the time.” “You have to be careful, you got to know what you own.” (More details from the interview, you can find in the videos below. )

Let's take a look at Lee Cooperman's top 5 stock holdings at the end of March.

During the first quarter of 2019, Omega Advisers raised its position in Atlanta-based financial service company, First Data Corporation (NYSE:FDC) by 190% to 6.92 million shares worth $181.78 million. The most valuable position in its 13F portfolio amassed 11.11% of it. Year-to-date, the company’s stock is up by 60.33%, having a closing price on June 20th of $27.32. Its market cap is of $25.63 billion, and it is trading at a price-to-earnings (P/E) ratio of 24.53. In its financial report for Q1 2019, First Data Corporation disclosed revenues of $2.32 billion and diluted EPS of $0.17, compared to revenues of $2.29 billion and diluted EPS of $0.11 in the last quarter of 2018.

The second most valuable position Leon Cooperman held at the end of March was in Alphabet Inc. (NASDAQ:GOOGL), the 4th among the 30 Most Popular Stocks Among Hedge Funds in Q1 of 2019. During the quarter, the fund boosted its stake in the company by 33% to 109,000 shares outstanding, with a value of $128.28 million, amassing 7.84% of its 13F portfolio. Over the past six months, Alphabet’s (GOOGL) stock gained 12.30%, closing on June 20th with a price of $ 1,113.20 per share. The company has a market cap of $777.68 billion, and it is trading at a P/E ratio of 28.13.

United Continental Holdings, Inc. (NASDAQ:UAL) counted for the fund’s third biggest position at the end of the first quarter of 2019. This $23.02 billion market cap airline holding company trades at a P/E ratio of 10.47. Over the last 12 months, United Continental’s stock gained 19.47%, and on June 20th it had a closing price of $87.14. For the first quarter of 2019, the company reported net income of $292 million and diluted EPS of $1.09, compared to net income of $145 million and diluted EPS of $0.51 for the fourth quarter of 2018. Omega Advisors reported $92.61 million worth a stake in the company, on the account of 1.16 million shares.

The fund’s fourth and fifth biggest holdings at the end of March were Chimera Investment Corporation (NYSE:CIM), in which the fund reported a position worth $90.37 million on the basis of 4.82 million shares and Cigna Corporation (NYSE:CI) whose 545,000 shares with a value of $87.65 million the fund reported holding.

 

Disclosure: None.

This article was originally published at Insider Monkey.