The 10th Annual New York Value Investing Congress takes place in New York on September 8th and September 9th 2014. ValueWalk will be providing coverage of the event – below are notes from Leon Cooperman’s presentation.
Leon Cooperman was a General Partner of Goldman Sachs & Co. and Chairman and Chief Executive Officer of Goldman Sachs Asset Management at the end of 1991 when he left to organize a private investment partnership, Omega Advisors, Inc. For nine consecutive years, Lee was voted the number one portfolio strategist in the Institutional Investor All-America Research Team survey. Lee received his MBA from Columbia University. He is a recipient of Roger Williams University’s Honorary Doctor of Finance and Hunter College’s Honorary Doctor of Humane Letters.
Leon Cooperman: Are Equities Still the Best House in the Financial Asset Neighborhood?
Leon Cooperman’s Omega Advisors is a roughly $10bn investment partnership. Over 21 years have beaten the S&P 500 by 500 basis points.
Still believes equities are the best house in the financial asset neighborhood.
Market view is that there is still time and price left in the US equity bull market but we are in the zone of fair valuation. Fixed income in the US is unattractive. Equity markets in Europe and Japan should deliver respectable returns over the coming year. Dollar should be a strong currency. His views are based on a continued US expansion.
Believes the current economic expansion has the potential to be longer than the typical economic expansion. The conditions that normally lead to a recession are generally not present today. Many areas in the US still running below potential output.
On average, the stock market peaks 2 years following an initial rate hike.
Fixed income doesn’t belong where it is and in time will rise. If 10 year rates go from 2.4% to 4% total return would be minus 5%, etc.
US stock market in the zone of fair valuation. Since 1960 the average P/E ratio was 14.9x but over that period the 10 year was yielding over 6%. Japan looks interesting at 13.6x P/E and similar yield to US.
Leon Cooperman’s individual ideas
Briefly highlighted a few individual ideas: Gaming and Leisure Properties Inc (NASDAQ:GLPI) – dividend could move higher by 50% (part of income & growth strategy); Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) (as part of high risk/high return group) – sells around 10x earnings and growing at a 15% rate; QEP Resources Inc (NYSE:QEP) as an asset restructuring play; Actavis plc (NYSE:ACT) as a growth at a reasonable price idea; Monitise Plc (LON:MONI) (OTCMKTS:MONIF) – rapidly growing mobile banking platform
Mostly macro comments from Leon Cooperman. US market close to fairly valued but still room to run, fixed income looks unattractive.