Leon Cooperman, Omega Advisors, explains the three things that bull investors need to see to jump into the stock market.
Blue Mountain Credit Fund still in the red YTD; here are their biggest holdings
Blue Mountain Credit Alternatives Fund was up 0.36% for November, although the fund remains well into the red for the year. For the first 11 months, the fund was down 24.85% gross. Q3 2020 hedge fund letters, conferences and more Blue Mountain's fundamental credit strategy was up 0.63% for November, including a 1.09% gain for Read More
welcome to the halftime show, four hours to go until the show and we’re at four and a half year highs for the s&p 500 and the nasdaq trieding at more than a 11 year high and here is what we’re following, draghi delivers but will bernanke keep the rally going and real estate rebound, why the best investment you have now may be your house. trading today’s big movers with john, jerry and stephanie and tanner skpchk our special guest for the full hour, lee cooper and omega advisers and get right to today’s big surge in stocks. draghi delivers. are you a believer? i think it does, scott, and like a lot of folks i would love to reload and buy more at lower levels than we just haven’t had that opportunity. we talked last thursday about you had the opportunity then. i said this is the great time folks to be buying. look at all of the upside call activity there was in the s&p 500 in the emerging markets, in the small cap indices. all of them seeing huge upside call buying in the last half hour of trading thursday and all of those people are being rewarded big time today on this. stephanie. yeah, i think that we got enough from draghi and team to control the situation for now and actually take them off the front page for a bit. now we can focus on the u.s. da it awhich actually was pretty decent today in terms of ism and initial claims and challenger gray and adp, et cetera, and that add onto housing and add onto auto sales and add onto consumer all kind of continues to support 2, 2.5% gdp growth and so i think you can look at some of the cyclical stocks that have gotten beaten up that even though they’re having a nice rally today, they still are well below the historical averages. we have been adding to that. how do you see the market today? central banks, i think there is a huge distinction we should make. central banks are great at preventing financial crisis. i am more skeptical they’re good at economic growth. the second quarter earnings season was one of the weakest over the last three year bull market, so i think third quarter earnings is going to be a crucial period. it is a show me quarter to show that earnings growth can persist with the market at these levels. turn to our guest host, lee cooper, the ceo and founder of omega advisers. i will call you the maestro because you have really orchestrated this market better than most people have. you’re up 22% year-to-date. are you one of the key speakers delivering alpha conference in july where you said you were moderately constructive on the u.s. equity markets then. where are you now given the newspapers of the day from europe? i would say that first of all i would give the credit to the performance this year to my team and we have had the right call in the markets and steve einhorn heads up our macro work and we have been favorably disposed to risk at sets all year long and have a credit team and has done a great job and a good year so far and we have to wait until december 31. you’re modest. for good reasons. basically i would say at the current level 1430 in the s&p we think the market is in a zone of fair valuation and i would not be banging the table at this level. i think you have a lot of issues. we’re looking for 12-month forward earnings, about $108 in the s&p so about 13 and when you consider the third quarter is the first down year-over-year earnings quarter since the june of ’09 when you recognized the huge tax uncertainty that businesses facing going into 2013, the fiscal cliff issues, i think the market’s in a zone of fair valuation about where it ought to be. we make a chart what the bulls need to see and this is your thought what would take it higher from here, reacceleration of economic activity. i wouldn’t want to base anything on day or two of data but we have to watch that carefully. i think the reacceleration of economic activity we have one issue and second the ecb doing something really surprising and frankly what draghi did today is what he indicated he will do a month ago. i don’t think it is a big surprise. a move in the right directions which we thought all along they would do. i remember a year and a half ago saying two schools of thought of what’s going on in europe. one school of thought is the problem is so serious, so draconian in consequences that it exceeded the average person’s bandwidth and they didn’t want to be involved in the market. the second school of thought which is the school of thought i have been in is basically when a problem is perceived to be so catastrophic in impact that problem normally doesn’t hit and the ecb and the imf 70% funded by the united states, germany, france, united states, china, japan, they will all kick in and do what they have to do to kick the can down the road. i think that’s what’s happening. we’re not solving the problem. we’re dealing with it and kicking it down the road. the third area i think would make a big difference and not to get involved in politics about as difficult to talk about as abortion but i think a romney victory would put the market above the range where we are at presently and i am kind of thinking if i had to handicap it if a romney victory, let me just say that the significance of an event for the market is very much a function of where the market is when the event occurs. i say from the roughly 1400 area a romney victory would add 100 points to the s&p and an obama victory would probably be maybe a 50-point decline. i think it is very important. we’re at a crucial point in economic history of the country and i think what happens in november is very important. tom lee of j.p. morgan was on one of the earlier programs this morning talk in the same measure on what a romney victory would mean for the markets. let me — let’s go politics for just a second since we brought it up. let me push back on that for a second and play the other side if i could. markets since president obama has taken off, dow jones industrial average up 60%. narc up better than 100 and s&p up 65 or so percent and corporate profits record levels. can i come back at you and say, hey, who is to say the stock market can’t go higher if president obama is re-elected? anything can happen but the president came in when you were at a lifetime if not generation low and presently it was 1527 in march of 2000 and 1565 in october 2007. we really haven’t made progress in the last 20 years. i don’t hold the president responsible. i think my issue with president is his divisive dialog trying to pit the 99% against the 1% as opposed to trying to unify. if i had the president’s prosecute he is and i was in the white house i would invite the major wisconsin leaders in the united states into the white house and ask them what should we be doing to change the ad to the business and get you investing in doing more and he does not follow the approach. inherit a difficult hand, absolutely, but i think he made it worse rather than better. take the market a step further. if you think it can go higher if romney wins, i will go inside your portfolio and let everybody know and we’ll give you direct stock picks and show you how lee has managed to maneuver the choppy waters over the last several months better than most people in the industry have. where do you want to be in the market to take advantage. i know where i don’t want to be. i think the bubble, the u.s. government bond yields and i will give you a comparison. in 2000 sysco was 100 times earnings, didn’t pay a dividend, no yield, and ten-year u.s. government bonds were 6.5%. today taking consensus estimates it is ten times next year’s earning, yielding 3% which is twice the 1.5% yield in u.s. government bonds, so a very pessimistic price structure built into many equities and the bond yield is just in my opinion being subsidized by the government. i want to be out of u.s. government bonds. i think they’re a mispriced asset class. i am not shore them because i recognize the financial re pregnancy policies being followed by the fed, and i want to be in select number of equities, and i can find many, many equities that are attractively priced so i kind of process of eliminaon and i put my pants on one leg at a time. i am just like you. i have more zeros than clients and entrusted money to me to deal with and basically what are my choices today? my choice is i can put my client’s money in cash and that’s zero and mr. bernanke tells me it will be zero a couple more years. i can buy u.s. government bonds and we dealt with that already. i can buy high yield. well, i will give you stistics. the high yield index, bloomburg high yield index in november of ’08 was 25%. today it is less than seven. the multiple in the market today is lower than it was when high yield was 25%. i left with equities by default, why i have a certain amount of cash to protect against the disaster because we have a lot of tail risk out there and i think equities generally speaking are the place to be and you have to decide with which equities you want to own and we have plenty we think are still attractive and i would say overall in the market we’ll certainly go inside your portfolio a little and talk stock specific stories. i had a question about kinder morgan. you were just discussing, sir, about the fiscal cliff as well as of course the election and the implications for dividends and so forth because of that. this is a big dividend yield or about 4%, a lot of mlps would fall into the category of people worrying about those if indeed the tax structure would change significantly as it is due to change unless we address it pi the end of the year. are you still comfortable holding kinder morgan under those circumstances? well, i look at the total return. i think kinder morgan is a 4% yield, probably growing close to 10% per annum, so a 14% return. the taxes will be the taxes. that’s one of the uncertainties i referenced earlier as to why i would not be overly bullish at the present time but if the president has his way and they triple the tax on dividends, it is very negative for all stocks not just dividend paying stocks because the companies will alter policies. buybacks will be more favored relative to dividends if they triple the tax rate on dividends. kinder morgan is just one of a number of stocks. i spent four hours yesterday morning. we own full disclosure 14% position in a company called kkr financial which is a debt management arm of kkr, and publicly traded new york stock exchange and yields 9.2% and 9.2% dividend yield is only on about a 60% dividend payout ratio so it is very secure and we expect it to grow. have you a company growing 5 or 6%. i think it will go up overtime. over the next 50 minutes we’ll do a deep dive inside leon cooperman’s portfolio and how he managed the markets very well over the last several months, certainly beating many of his colleagues and again when people were saying sell in may and go away he was urging folks to doed opposite. brian shactman is keeping an eyes on sears. up more than 6.5% and eddie lamb period of time and the various companies 2.4 million shares. in terms of direct and indirect ownership he owns about 58 plus million shares at present. the stock is up sharply year-to-date, about 75%, and in the last six months as lagged a little bit. back to you. stephanie, a trade on sears? i think eddie lamb period of time has done a lot of good thing at the company. i was impressed with the gross margins in the most recent quarter. the problem i have with series is he doesn’t have this aggressive policy or plan to increase sales, to increase the top line. they haven’t grown the top line in several years. if you were looking for a value play, j.c. penney is the one. i am not buying it up 5% here. i think ron johnson does have an aggressive play in terms of making sure they can grow sales over the long-term with the store in the store concept. as we though break, take a look at the markets. it is a big day, materials, financial stocks leading the way higher today and the s&p health care sector reaching a record high for the second day in a row.