Billionaire hedge fund manager Leon Cooperman, the longtime chairman and CEO of now-defunct investment advisory Omega Advisors, isn’t bullish on the economy’s long-term outlook, but the short-term should be favorable for stocks—even if election results are challenged, he said on CNBC Friday.
In a Friday morning interview on CNBC, Cooperman, who has publicly stated he voted for former vice president Joe Biden, said that while the election outcome remains too close to call, “what we know for sure is it’s going to be challenged,” adding that it could be weeks before the final result is officially called—echoing similar concerns on Wall Street.
Cooperman, 77, still thinks the near-term market outlook is favorable thanks to the likelihood of Biden in the White House and a split Congress; Federal Reserve policy that should keep interest rates low; the probability of good news on the vaccine front; and solid prospects of another stimulus bill becoming law.
He’s more bearish than Wall Street on the long term, however, citing the U.S. government’s massive debt pile of $27 trillion, which is up nearly five times compared with 20 years ago, and has more than doubled in the last decade after coronavirus spending and President Trump’s tax cuts.
In the meantime, he’s still piled into momentum and growth stocks like Google parent Alphabet, Microsoft, Amazon and Facebook—a cadre of pandemic market favorites that Cooperman says he’s not buying, “but not selling, either,” calling them “better than gold.”
Though the S&P 500 is trading at sky-high multiples of more than 20 times earnings, Cooperman says he’s finding a lot of relatively cheap stocks (in the four to eight times earnings range) “that have good stories,” including Cigna, one of his favorites, Navient, Spectrum and General Motors.
Cooperman also holds what he calls a “controversial position” in AMC Networks, the New York-based owner of cable channels like AMC, IFC and BBC America, which has seen its stock shed nearly 40% this year. “I’ve been wrong before,” he noted.
“Who pays for the party once the party’s over?” asked Cooperman on Friday, before discussing how the national debt has skyrocketed (it’s up more than $7 trillion in the past four years). ”There’s a long-term consequence to what’s going on; there’s just too much debt in the system. . . . I’m assuming in the next 12 to 18 months something will happen that changes this Goldilocks environment, and it will force the hand of the Fed,” he added, concluding that it might be the U.S. dollar going to new lows and inflation picking up.
The election outcome that Wall Street thinks is now most likely—a Biden victory and a split Congress—“couldn’t have been better for stocks,” Vital Knowledge Media founder Adam Crisafulli noted on Thursday—a sentiment that’s been echoed by many Wall Street experts (including Cooperman) since Wednesday, given that a split Congress makes it unlikely Biden’s proposed corporate tax hike becomes law. As Cooperman reiterated Friday morning, many investors are now back to eyeing the prospects of additional fiscal stimulus, vaccine development and when the Federal Reserve might decide to raise interest rates once again.
$2.5 billion. That’s how much Forbes estimates Cooperman, the son of a plumber from the Bronx, is worth.