Videos

Leon Cooperman on Hedge Funds, HFT, $AAPL, USTs, $SPY [VIDEO]

Leon Cooperman on Hedge Funds, HFT, $AAPL, USTs, $SPY [VIDEO]

 Leon Cooperman was on CNBC yesterday for a lengthy interview. Below we have every video, plus the title of the video, and the computer generated transcript. Enjoy!

Can SEC Stop Wall Street Casino?

Leon Cooperman, chairman & CEO of Omega Advisors, says the SEC must put a stop to “casino markets.”

Transcript:

has wall street turned into a giant casino and what can be done to return wall street to its original purpose? leon cooperman wrote an op-ed in the financial times last month along with themist trader joe salusi. mark cuban is still with us. mr. cooperman, why did you feel a need to pen an op-ed about this topic right now? i guess to quote there’s an old-timer who headed up the office of mgts and budget by the name of burt lance and he coined the if it ain’t broke, don’t fix it. if it’s broke, fix it. how much incidents does the s.e.c. have to say, they couldn’t open their own offering, facebook, 70% of daily volume has nothing to do with research and the slicing and dicing. it has driven the public out of the market and raised the cost of capital to business. the s.e.c. has been very big on competitive markets, narrowing spreads. it’s in the s.e.c. and public’sinterest that the brokerage community have recent property or they’ll withdra from the business and stop providing services. i think the s.e.c. should step forth. the uptick rule was institutedin the ’30s as a result of the abuses coming out of the greatdepression. it serves the markets well for i don’t know 70-odd years. we had the problems arise subsequent to removal of thuptick rule. the first step as a trial would be to reinstate the uptick rule and incapacitate the high frequency traders and see what happens to the market as a result of this, the marketmechanism. that’s my view, don’t fix it. i don’t get the whole hftthing, but i’m not appear plektic as the people on the panel.investment confidence has been ruined by jon corzine, berniemadoff, the list goes on and on. is the individual investor hurt by hft? they’re trading for tenths of a cents. he’s not trying to — by how much, sir? how much? why should they be able to run the public out? how hurt are they being? that’s my point. how hurt?why is should they be hurt at all or abused? we’re talking about tenths of cents and hundredths the cents. why not get the individual investors to write them a check? that’s crazy. ichl an apologist for hft at all. i think there are other ills out there, and nobody convinced me, by the way, that it was hft that caused the flash crash candidly. nobody identified what happened, and the knight stuff was more — that’s so not true. that’s so not true. a great resource is nanax.net. they go into enormous detail about the flash crash from 2010, but all the mini flash crashes that happen every single day. it’s not like this is just hypothetical. it happens, and it’s out there every day. there’s no value. look, you have to ask yourself, what is the purpose of wall street? its original purpose was too create capital for companies to grow.what we’ve seen over the last 20-plus years is that the numberof companies coming public has dropped dramatically. if you want to talk about correlations, look at the correlation between the drop in the nobody ipos, 60 million and others and unemployment. as the number of ipos in that range goes down, unemployment goes up. that’s because you can’t come to wall street anymore like uktd in the ’80s and ’90s and have an ipo raise money and grow your company. there’s a lot of differentreasons for it but a lot is with algorithmic trading and everybody is looking for a tenth of a cent and they’re doing it a million times a second and trying to add it up. there is no value to hft, period, end of story. mark, it’s joe. you’re right on, and you’ve been right on the entire time. lee is a long-term investor, and this is what people are missing in the argument. when a long-term investor has a conflict, the s.e.c.’s mandate is always to side with thelodge-term investor to facilitate capital formulation like mark is talking about. that’s what the s.e.c. is supposed to be doing?supposed to be doing and doing are two different things. i have the testimony from mary shapiro or at least the commentary she’s giving on chill today. in it she says after the flash crash, the agency — heez are her words — were well-positioned to respond. baloney or what? it tooks five months to create a report. there’s no way to reconstruct the events of may 6th, and it took five months. they don’t have the futures market in the audited trail pro pfl. 15 years of regulation got us into this fragmented market. 15 years of things like regular ats, reagan-ms. the real market maker who had obligations to their customers when they were trading got lost. they left. they left the markets. there’s no more economics in it for them now. they’ve been replaced by the automated market who doesn’t have customers. they trade proprietarily. long-term investors trovethat phenomena as well without a doubt. they drove down costs so they couldn’t make money and now they blame hfts. the brokerage firm dent on dell mallization. there’s a desire to reduce trading costs, reduce the spread between the bid and ask and et cetera. they’re driven it to the point where the brokerage firms are no longer profitable so they exit it. calling the markets a casino is that a big exfreem? it was up six points at one time today and down six points. it has logical movement.the high frequency traders, they talk about the liquidity theycreate for the market. what’s the quality of the liquidity of the market. it’s flat at night and the morning. the holding period is a minute or two. it’s seconds. some say it’s ironic that a man who beat the house so to speak wants to change thebusiness. to be honest with you, i’m going to benefit from all this stuff. i’m not going to be victimized, because i have a terrific team of 17 analysts work with me. we’re calling on companydirectly and not relying on wall street research. to the extent that wall street research goes away and creates more inefficiencies, people that have the ability to do the research can can do better. sometimes i advocate things not in my self-interest. the system is broken. enough event vs taken place to suggest there’s a problem, and when you talk to duncan, i believe he’s say 730% of the new york stock exchange volume has nothing to do with fundamental investing. it’s the high frequency tradersand slicing and dicing of etfs. we know the public has left themarket. why? since the industry sdint self-police and less it fester for years, the europes are talking about banning things and stopping things. they’re going to come in heavy-handed.the s.e.c. hasn’t gone near there. you don’t want to ban things.you do want to smartly attack the issue and get rid of thepayment for order flow. wait, wait, wait. why wouldn’t you ban it?you haven’t given one reason why it should exist? mark, you can do things to make it go away. take the profit incentive away. it will disappear on its own. the key is how you respond when you recognize things didn’t go the way you expected. now we got to respond, but just saying hft is there doesn’t mean you should keep it. that’s a very good observation. i’m just kind of a gradualist. i’m saying at a minimum there’s a human cry from professional investors like myself that they made a mistake by taking out of uptick rule. why don’t they reinstate it for a trial period to see where the shenanigans go away and the market is more rational. the public doesn’t understand the market. a large number of professionals don’t understand the market. this is not good. we have to deal with it. i won’t let you run withoutgiving me a comment on the markets either. how do you see it right now? we’ve been very optimistic for two and a half years. i recognize two wildcards we have to think about. wildcard number one, the fed has created an environment where there is no effective alternative to common stocks. cash is zero, will be zero for a couple more years. u.s. government bonds are a jokebasically in terms of where they sell. thsidyized by the fed. the high yield is selling the tightest credit spreads and the lowest yields in multiple, multiple years where stocks don’t discount it.that’s a wildcard plus, and the second thing is since 2008institutions and individuals have largely risked their portfolios, so the pain trade for them is if the market goes up. those are the pluses. on the negative side i say the third quarter this year is going to be the first down quarter year over year in s&p profitssince the third quarter of ’09. i think the creators in washington will deal with the fiscal cliff, but until they do it it’s an uncertainty.the tax regime is negative. we don’t know how much it is going.valuations are in a zone of what i call fair, and we have election uncertainty. i’m looking for a change, but it doesn’t look like the change i’m rooting for. your insights are always welcome on this program, mr. cooperman. thank you for coming up. thank you. joe, thank you for coming in. mark cuban will stick with us as

Leon Cooperman on HFT: ‘The System Is Broken’

The Securities and Exchange Commission has to put a stop to casino-style markets caused by high-frequency trading, says Leon Cooperman of Omega Advisors.

Transcript:

its original purpose? leon cooperman wrote an op-ed in the financial times last month along with themist trader joe salusi.mark cuban is still with us. mr. cooperman, why did you feel a need to pen an op-ed about this topic right now? i guess to quote there’s an old-timer who headed up the office of mgts and budget by the name of burt lance and he coined the if it ain’t broke, don’t fix it. if it’s broke, fix it. how much incidents does the s.e.c. have to say, they couldn’t open their own offering, facebook, 70% of daily volume has nothing to do with research and the slicing and dicing. it has driven the public out of the market and raised the cost of capital to business. the s.e.c. has been very big on competitive markets, narrowing spreads. it’s in the s.e.c. and public’s interest that the brokerage community have recent property or they’ll withdra from the business and stop providing services. i think the s.e.c. should step forth. the uptick rule was instituted in the ’30s as a result of the abuses coming out of the great depression. it serves the markets well for i don’t know 70-odd years. we had the problems arisesubsequent to removal of th uptick rule. the first step as a trial would be to reinstate the uptick rule and incapacitate the highfrequency traders and see what happens to the market as aresult of this, the market mechanism. that’s my view, don’t fix it. i don’t get the whole hft thing, but i’m not appear plektic as the people on the panel. investment confidence has been ruined by jon corzine, bernie madoff, the list goes on and on. is the individual investor hurt by hft? they’re trading for tenths of acents. he’s not trying to — by how much, sir? how much? why should they be able to run the public out? how hurt are they being? that’s my point. how hurt? why is should they be hurt atall or abused? we’re talking about tenths of cents and hundredths the cents. why not get the individual investors to write them a check? that’s crazy. ichl an apologist for hft at all. i think there are other ills out there, and nobody convinced me, by the way, that it was hft that caused the flash crash candidly.nobody identified what happened, and the knight stuff was more — that’s so not true. that’s so not true. a great resource is nanax.net. they go into enormous detail about the flash crash from 2010, but all the mini flash crashes that happen every single day. it’s not like this is just hypothetical. it happens, and it’s out there every day. there’s no value. look, you have to ask yourself, what is the purpose of wall street? its original purpose was too create capital for companies to grow. what we’ve seen over the last 20-plus years is that the number of companies coming public has dropped dramatically. if you want to talk about correlations, look at the correlation between the drop inthe nobody ipos, 60 million and others and unemployment. as the number of ipos in that range goes down, unemploymentgoes up. that’s because you can’t come to wall street anymore like uktd in the ’80s and ’90s and have an ipo raise money and grow your company. there’s a lot of different reasons for it but a lot is with algorithmic trading and everybody is looking for a tenth of a cent and they’re doing it a million times a second andtrying to add it up. there is no value to hft, period, end of story.mark, it’s joe. you’re right on, and you’ve been right on the entire time. lee is a long-term investor, and this is what people are missing in the argument. when a long-term investor has aconflict, the s.e.c.’s mandate is always to side with the lodge-term investor to facilitate capital formulation like mark is talking about. that’s what the s.e.c. is supposed to be doing?supposed to be doing and doing are two different things. i have the testimony from mary shapiro or at least the commentary she’s giving on chill today. in it she says after the flash crash, the agency — heez are her words — were well-positioned to respond. baloney or what? it tooks five months to create a report. there’s no way to reconstruct the events of may 6th, and it took five months. they don’t have the futures market in the audited trail pro pfl. 15 years of regulation got us into this fragmented market. 15 years of things like regular ats, reagan-ms. the real market maker who had obligations to their customers when they were trading got lost. they left. they left the markets. there’s no more economics in it for them now. they’ve been replaced by the automated market who doesn’t have customers. they trade proprietarily. long-term investors trovethat phenomena as well without a doubt. they drove down costs so they couldn’t make money and now they blame hfts. the brokerage firm dent on dell mallization. there’s a desire to reduce trading costs, reduce the spread between the bid and ask and et cetera. they’re driven it to the point where the brokerage firms are no longer profitable so they exit it. calling the markets a casino is that a big exfreem? it was up six points at one time today and down six points. it has logical movement.the high frequency traders, they talk about the liquidity theycreate for the market. what’s the quality of the liquidity of the market. it’s flat at night and the morning. the holding period is a minute or two. it’s seconds. some say it’s ironic that a man who beat the house so to speak wants to change thebusiness. to be honest with you, i’m going to benefit from all this stuff. i’m not going to be victimized, because i have a terrific team of 17 analysts work with me. we’re calling on companydirectly and not relying on wall street research. to the extent that wall street research goes away and creates more inefficiencies, people that have the ability to do the research can can do better. sometimes i advocate things not in my self-interest. the system is broken. enough event vs taken place to suggest there’s a problem, and when you talk to duncan, i believe he’s say 730% of the new york stock exchange volume has nothing to do with fundamental investing. it’s the high frequency tradersand slicing and dicing of etfs. we know the public has left themarket. why? since the industry sdint self-police and less it fester for years, the europes are talking about banning things and stopping things. they’re going to come in heavy-handed.the s.e.c. hasn’t gone near there. you don’t want to ban things.you do want to smartly attack the issue and get rid of thepayment for order flow. wait, wait, wait. why wouldn’t you ban it?you haven’t given one reason why it should exist? mark, you can do things to make it go away. take the profit incentive away. it will disappear on its own. the key is how you respond when you recognize things didn’t go the way you expected. now we got to respond, but just saying hft is there doesn’t mean you should keep it. that’s a very good observation. i’m just kind of a gradualist. i’m saying at a minimum there’s a human cry from professional investors like myself that they made a mistake by taking out of uptick rule. why don’t they reinstate it for a trial period to see where the shenanigans go away and the market is more rational. the public doesn’t understand the market. a large number of professionals don’t understand the market. this is not good. we have to deal with it. i won’t let you run withoutgiving me a comment on the markets either. how do you see it right now? we’ve been very optimistic for two and a half years. i recognize two wildcards we have to think about. wildcard number one, the fed has created an environment where there is no effective alternative to common stocks. cash is zero, will be zero for a couple more years. u.s. government bonds are a jokebasically in terms of where they sell. thsidyized by the fed. the high yield is selling the tightest credit spreads and the lowest yields in multiple, multiple years where stocks don’t discount it.that’s a wildcard plus, and the second thing is since 2008institutions and individuals have largely risked their portfolios, so the pain trade for them is if the market goes up. those are the pluses. on the negative side i say the third quarter this year is going to be the first down quarter year over year in s&p profitssince the third quarter of ’09. i think the creators in washington will deal with the fiscal cliff, but until they do it it’s an uncertainty.the tax regime is negative. we don’t know how much it is going.valuations are in a zone of what i call fair, and we have election uncertainty. i’m looking for a change, but it doesn’t look like the change i’m rooting for. your insights are always

Kate Kelly & Leon Cooperman on Hedge Funds

CNBC’s Kate Kelly offers insight on hedge funds’ muted returns. Leon Cooperman, Omega Advisors, also weighs in.

Transcript:

welcome back to the halftime show where our guest host leecooperman joining us for the full year. he’s had a good year, up 22%, a good august as well and kate kelly has been taking a look at performance of other hedge funds in this year and, kate, it has been a fairly difficult year. it has been a difficult spite of years and there are a number of hedge funds that struggled tomake these in return and beat the hedge fund benchmark andsome are struggling and still below the high water mark andjohn paulson may be exhibit a. he has seen his assetsessentially slashed in half in the last 18 months or so. take a look at the chart fro the other day. i was talking about the mutedreturns in august, where people are weren’t putting on a lot ofbets of size or many weren’t. you see the two biggest macrofunds, moore global and bref an howard flat on the month andtudor up a few percentage points for the year and flat for themonth and he is beating the af ranl hedge fund if you take a look at the benchmark index and the average is up 2.4 somethingyear-to-date and he is a little better than that. still, we’re not seeing whopping returns. there is a handful of playersincluding our guest mr. cooperman who are really beating the competition right now and generating great ideas. take a look.these numbers have really not been put out yet. green light capital up 4% for the month of august and about 11% on the year, sac up 1.5% or so for the month of august, 8% for the year, 8 approximates for third point for perry partners and take a look also at maverick capital. that’s an interesting story. they struggled horribly in 2011. i believe their head money manager described it as something like the darkest year they have been through in 18 years and they were down 15% and all of the funds across the bo reasonable doubt are up north of 20% and i am told that has less to do with the equities rally and kind of what we’re seeing in the s&p and just smart short positions as much as anything else and things they had on last year and actually bounced back since then as well as of course long positions and it is really been a mixed bag and i think theplayers that are out performing probably feel even lonelier thanusual in a good way. just on that note, can you speak to the difficulty in navigating the market this is year? i mean, obviously you have had a good year and many hedge funds have not. let me say this. we’re doing well because we thought that he with should have risk on the sheets. we’re now sitting here september 5, 6, 7, whatever the date is, a long race. to are this year the race is over december 31, so i don’t think i can talk about my performance and december 31 that sounts and these are all very good people that have excellent longer term records and i have always told investors with me you have to take a longer term view. we have years we under perform and years we out perform and over a 20-year history we beat it by 540 basis points and net of all fees and 70% net long on average and no leverage employed. only leverage in one year, 1993 up 71% and a lot of monthen in bonds and it is a long race and i think you just have to be with somebody you have confidence in,you trust, and you understand their strategy and philosophy and i am not a month to month kind of guy. i am a long-term investor, and i try to attract investors that have a longer term view. you haven’t had this problem, i don’t think, but what if youare a john paulson or lee ainsley and you have essentiallybelow the high water mark and returns are negative and if you’re an investor in a fund like that, do you want to hang in there? do you feel like the approximate earn is manage the money for free and maybe there is a bounceback in store. i have been there and done that and business in 20 years and down years and i missed the significance of lehman in ’08, so we were down, a little less than the market but down substantially. down 2002 and half the market and essentially where am i going? first of all, i have a strong philosophy that if you have a highater mark that that is an asset of the investor, so if you throw in the towel when you are down, you are depriving your investor of an asset they’re entitled to. if the investor lost kofs in you or the market and wants the money back, you give it back. my view is in 2008 i had substantial redemptions. every redemption was made 100% for cash and nobody was gated and john weinberg, one of my mentors, deceased now had a favorite expression, lincoln freed the slaves, so i don’t want anybody to be an investor in my fund that doesn’t want to be an investor so they always get back the money per the doctor the and somebody has not lost confidence in you and wants to stay with you, you owe them that ability to come back with that so i have been there and i have done that and john paulson has a very formidable high water mark and i think he presented anopportunity to staff to eat the high water mark and pay them.getting them out of pocket no matter what this year? he has a big pocket so i guess he can afford to do. i think you have to make sure you just investing with people you understand and that you share their value system and you have a proper investment horizon and my first page of my marketing material says when people come and say what will they earn if we invest with you, i say i don’t know what you are going to earn but let me tell what you makes me happy. because what makes me happy doesn’t make you happy, i would rather you not invest with me because we’re doomed to have a failed relationship.my goal, number one, i don’t want to have a losing year. i am a hedge fund. i could be short. i could be out. if i am down for the year i got the market wrong and i can’t be happy with myself.second, the investor today can get an s&p 500 return for lessthan 10 basis points by going to an index fund. my second objective is to work my tail off to beat this mindless index called the s&p 500. believe me, it is not so easy as this yoer demonstrates. my third objective, i don’t want a leverage fund and all of my partners, my general partners and myself we account for over 20% of our assets and we would be happy making 12 to 15% return per annum and we want acceptablelevel of volatility. those are my goals. i have done it for 20 yearspoint to point and i have had down years and those people thatlost confidence in me got their money back if they wanted it andthose that consistent lose confidence hung on and we’resubstantially above. i think this is from memory now and the market is still well below price wise where it was in march of 2000 and including income and our capital is about 275% from march of 2000. if people take a long-term view we’ll do just fine.the other point i make is i look at omega in a simplistic fashion.it is a family office. okay? i am not going to take my money and give it to some individual that charges 2 and 20 and might not have my work ethic and might not be any smarter than my teamis. so i am going to keep doing this as long as i can do it and i am going to honor high water marks and believe me i am worried. i think next year could be a down year for the market because no matter who is elected and i do have i a strong preference but no matter who is elected we have a lot of wick chop and can’t run triion deficits and not have retribution in themarketplace. for sure.

Apple Set for 15 Percent Growth: Cooperman

The iPhone maker looks to outperform the market over the next few years, Leon Cooperman of Omega Advisors says.

Transcript:

let’s start with apple. it is your top pick. it has been a winner. it is much loved from all of the hedges or at least most of them.are you as supportive here of the stock as you have been allalong the way? it is not our largest position by far. we have been in it for quite a while and i think barry stewart, my partner right on, i have to step back and explain what we do. we’re a value-based investor, so essentially a value-based investor tries to do is get more for less, and so to give you a statistical rundown if i will on the s&p, you buy the s&p, you’re buying an index growing about 6% a year. a dividend yield is about 2% onaverage, and a little over two times book value. the debt is about 35% of capital and earnings around 15 or 16% return on shareholders equity, and for the statistic, for a company with those statistics, you’re paying on average around 13, 13.5 times earnings. what we try to do is find more for less. a company growing more rapidly at a lower multiple, yielding more in the market, having more asset value than the market, and that’s kind of our game. you look at apple, and based on our earnings estimate it is less than 13 times next year’s earning, yielding under 2% and we think grows 15% so growing substantially more than the market and discount to the market multiple and slightly lower than market yield. so that would be an example and maybe 2.5, close to 3% upward flow at the present time.

Nasdaq 100 at 11.5-Year High

Amazon is contributing to the Nasdaq 100 rally — hitting an all-time high today ahead of its Kindle announcement. The FMHR traders discuss.

Transcript:

and explore your next investing idea. rjts the nasdaq hitting. the company is expected it unveil the latest weapon in the tablet battle and begins in just ore an hour. john fort with a preview.he is there. that’s right, scott. two weeks ago at the dosomething awards big celebrity like ben affleck were here andnow for the do something awards amazon hopes to do something here. we expect to see a refreshed lineup of kindles and tablets perhaps and the big question is what else? might we see something as unexpected as a phone, some kind of tv set-top box product to compete with apple tv and i tell you what, i got a piece this morning about no profit hardware. that’s the thing as an investor i would be wondering about. they don’t tend to make money at launch. apple expected to come out with a mini ipad and if they come in could apple get stuck with a bunch of costs and components and inventory if attention shifts to apple? i don’t know. all-time high today. i think john hit the exact point for amazon. they don’t make money. that’s the biggest issue here. it is a very hope type of trade. it is a very hopy trade and i would much rather own an apple or google where they take those products and turn them into profits over time. i think amazon hasn’t delivered for too many quarters. the stock as we said, do you i know you don’t own it. my last appearance on the program i think was squawk box was the day of the facebook offering and i said facebook was being priced like a beautiful woman without a blemish and anyblemish will kill the stock. i would rather own google or apple and i think both are up quite substantially and regetably, i don’t know about facebook but regrettably we see what happened there. we may take a little conversation to facebook at somepoint during the program as well and throughout the rest of theprogram we’ll go inside lee cooperman’s portfolio. let’s start with apple. it is your top pick. it has been a winner. it is much loved from all of the hedges or at least most of them. are you as supportive here of the stock as you have been all along the way? it is not our largest position by far. we have been in it for quite a while and i think barry stewart, my partner right on, i have to step back and explain what we do. we’re a value-based investor, so essentially a value-based investor tries to do is get more for less, and so to give you a statistical rundown if i will on the s&p, you buy the s&p, you’re buying an index growing about 6% a year. a dividend yield is about 2% on average, and a little over two times book value. the debt is about 35% of capital and earnings around 15 or 16% return on shareholders equity, and for the statistic, for a company with those statistics,you’re paying on average around 13, 13.5 times earnings. what we try to do is find more for less. a company growing more rapidly at a lower multiple, yielding more in the market, having more asset value than the market, and that’s kind of our game.you look at apple, and based on our earnings estimate it is lessthan 13 times next year’s earning, yielding under 2% and we think grows 15% so growing substantially more than the market and discount to the market multiple and slightly lower than market yield. so that would be an example and maybe 2.5, close to 3% upward flow at the present time. the point being that apple is cheap, right? taking all of the — we would know if it wasn’t. certainly you think it is. what if growth slows? can they continue? growth is slowing. i mean, from where they havebeen, and the market is priced and this is a 15% and sitting on$120 billion of cash and going up at an enormous rate everyyear and ubiquitous in the home today and i think they have apipeline of new products we’ll be looking at and this is just one.we have other positions and much larger. we’ll go there. iphone 5 is coming out, the expected date — i am buying my granddaughter one and my wife one and i am upgrading my phone. i know the demand will be at least three. i think it will be a lot bigger than that. how big was the victory over sam sung in court and does that mean for you that you think we can go substantially higher based on that victoria loan as far as denying htc,lg, samsung, the android devices the ability to compete directly by imitation. i think it validates their franchise and industrial position and a billion was obviously insignificant relative to the cash position. i think obviously a plus andvalidates their rength of their patent position and their industrial position. you have an opinion whether they should split the stock at this point or not? i am sure you do. will you share it with us? basically splitting stock is like if you have a $5 bill and you give me your $5 bill and i gave you five singles, that doesn’t make you any richer than you are. i guess you could say it would enlarge the potential market of buyers but they did that bygoing to a dividend. i guess they want to be included in the dow story is that if you split your stock and bring it down to a realistic level, include you in the dow which would create index buying, et cetera. that’s , right? those are all valid points. the active dend is fairly paltry by other standards, isn’t it? not for technology companies. a lot of cash maybe if the government wants to encourage hiring and investment and will change the repatriation of earnings taxation which would give apple a reason to bring back cash and like i said, splitting of stock is giving you five cycles and hopefully you will get up the day it happens but not lasting value. let’s talk about sprint, one of your best performers. hesse, ceo, orchestrated a pretty remarkable turn around, at least in the stock, wouldn’t you say? i think in the business as well. i am not an expert on sprint. we have a team that’s done the work on it. we think it is a consolidationcandidate which is why we originally bought at $2. we think the earnings and cash flow will go in the right direction which justify the present price but we think there is a good chance of aconsolidating transaction which will give us another significantleg up. we think it is very attractively priced. not an attractively priced as at two but still attractively priced and we would not besurprised if there was a corporate transaction that would give us another leg up in stock. stock up 112% year-to-date. your thoughts on sprint? the dramatic run it has had and whether you think it can continue and whether you would be a buyer of it here at these levels and whether you agree with lee and do you think it has more room? it could have more room. i think it needs to consolidate for a little while. i am concerned in the short-termthey don’t have the lte version of the iphone 5, so maybe that’syour reason the stock could pull back if they see a little harderout of the gates to get those sales but i do think themanagement is doing a very good job and i think the earningspower of the company over the next several years is definitelyhigher, so i like it. i am interested, mr. cooperman, what kind of transaction do you think they could make? are they the acquire error the ones — we hope not. we hope somebody seize thevirtue of the franchise and buys them and i won’t name names.there are potential acquirers. let me ask you other telecomnames, at&t, verizon, just in the context — not involved. i know you’re not involved. in the context of the dividend story, the stocks have been favorable because of the dividends they pay and the tax structure and everything that could come about.would you be less favorable in general towards dividend payingstocks if the tax policy changes at the end of the year?unequivocally. i would be less favorable toward stocks generally and trap he willing and raising the tax rate on income whether it is capital gains or dividends is negative prices. go something is worth less. i am not a dividend buyer. i am a total return kind of buyer. we have a lot of stocks in our portfolio that don’t pay adividend and decent size position and buying at decent book value and return on book euro over the next few years will be rising which will validate the book. gannett yields almost 5%.buying back 5% annually and everything has to have a story. if every stock, momentum investor and every stock you have is a new low list, you might be value investment and out of business. it is a combination of different kinds of securities giving you a certain portfolio picture. okay.

Cooperman Sees ‘Bubble’ in U.S. Bond Yields

U.S. government bonds are a “mispriced asset class,” Leon Cooperman of Omega Advisors tells CNBC.

Transcript:

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 verypessimistic price structure built into many equities and thebond yield is just in my opinion being subsidized by thegovernment. i want to be out of u.s. government bonds. i think they’re a mispriced asset class. i am not shore them because irecognize 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 ofprocess 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 andthat’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 sayoverall in the market we’ll certainly go inside

Cooperman: Market in ‘Zone of Fair Valuation’

The S&P 500 is headed toward 1430, says Leon Cooperman of Omega Advisors.

What the Bulls Need to See

Leon Cooperman, Omega Advisors, explains the three things that bull investors need to see to jump into the stock market.

Transcript:

welcome to the halftime show, four hours to go until the showand 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 whatwe’re following, draghi delivers but will bernanke keep the rallygoing and real estate rebound, why the best investment you have now may be your house. trading today’s big movers withjohn, jerry and stephanie and tanner skpchk our special guestfor 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, andthat add onto housing and add onto auto sales and add ontoconsumer all kind of continues to support 2, 2.5% gdp growthand so i think you can look at some of the cyclical stocks thathave gotten beaten up that even though they’re having a nicerally 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 shouldmake. 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 reallyorchestrated 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 ofissues. 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, ithink 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 isyour thought what would take it higher from here, reaccelerationof 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 theproblem is so serious, so draconian in consequences that it exceeded the average person’s bandwidth and they didn’t wantto be involved in the market. the second school of thought which is the school of thought i have been in is basically when aproblem is perceived to be so catastrophic in impact thatproblem 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 marketabove the range where we are at presently and i am kind ofthinking 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 100points 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 thechoppy waters over the last several months better than mostpeople in the industry have. where do you want to be in themarket 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 repregnancy 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. bernanketells 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 ithink 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 talkstock 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 yesterdaymorning. 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 payoutratio 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 plusmillion 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 recentquarter. the problem i have with series is he doesn’t have thisaggressive 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 alook 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.