Billionaire investor Leon Cooperman sees a market of stock pickers. Here’s what he’s buying.
“‘We have a self-inflicted crisis of irresponsible monetary and fiscal policy over the past decade.’“
It was billionaire hedge fund manager Leon Cooperman commenting on the current banking crisis that has seen the closure of SVB Financial Groups.
SIVB,
Silicon Valley Bank and crypto-friendly lenders Signature Bank and Silvergate Bank, as well as a bankruptcy filing SVB Financial. Also, over the weekend, UBS
UBS,
announced acquisition of 3.25 billion dollars of a struggling competitor Credit Suisse
CS,
Cooperman, president of the Omega Family Office, formerly Omega Advisor, told Bloomberg Radio on Monday that he “takes a view that we’re facing some kind of crisis, and we’ve seen that and we’re getting a predictable response from the government. It’s sad what’s going on in the country, but what they’re doing is essential to preserving the system.”
Also read: First Republic shares sink after credit rating cut three more places at S&P
The federal government last week organized a move by major banks to deposit $30 billion in the First Bank of the Republic.
FRC,
to prevent a fourth bank failure. That comes after the government promised to protect all depositors at Silicon Valley Bank and announced measures to ensure that deposits at other institutions remain safe.
Cooperman expects that the Federal Reserve will likely raise interest rates by 25 basis points on Wednesday and then it will be willing to “accept higher inflation” for the sake of stabilizing the financial system. . He said the latest crisis was a “reaction to mounting domestic debt” and questioned how many people want to buy US debt, estimated more than 31 trillion dollars. “Banks are no longer buyers,” he said.
“You know [Federal Reserve Chair Jerome] Powell says the stock market isn’t overvalued — this was a few years ago, due to current interest rates. But he never bothered to tell people that interest didn’t belong there,” Cooperman said.
In Cooperman’s opinion, investors are now in “a stock picker’s environment, especially if the S&P 500 turns out to be very boring.” He believes we’ve seen “fat years” and now “we’re headed for seven lean years,” adding that the S&P’s all-time high near 4,800 is likely to remain at the highest level for a long time.
“I think what’s happening in the world is a negative price/earnings ratio. And I want to make this point: If the government is seen as going to mitigate downside risks, then it has every right to reduce upside profits,” he said.
As for where he’s putting his money now, Cooperman said he has a handful of “one-time” investments in several mortgage-backed real estate investment trusts that are delivering returns ranging from 14% to 16%, along with some energy investments he admits to having. cost him this year.
“I usually assume world travel will come back, which will be a plus for energy demand. China’s exit from the blockade will be a plus for energy demand. We’re not going to deplete the Strategic Petroleum Reserve anymore, we’re going to have to rebuild it, and we’re not going to replace the reserves to the point that… we should be thoughtful about where we’re producing, ” he said.
“I have a bunch of oil stocks in my portfolio that have a current yield of 5% or 10%, with production costs much lower than current prices. They have virtually no debt and can buy back undervalued shares,” he said.
His hobby is Canada-based Paramount Resources
POU,
“They produce oil at $21 a barrel and production is growing by 15%. Stocks carry more than 5% debt,” he said.
