Leon Cooperman, chairman and chief executive officer at Omega Advisors, explains why he plans to convert his hedge fund at year-end into a family office, the action taken against him by the U.S. Securities and Exchange Commission, and his value investing strategy. He speaks with Erik Schatzker on “Bloomberg Markets: European Close.” (Source: Bloomberg)
For much of the past decade, Crispin Odey has been waiting for inflation to rear its ugly head. The fund manager has been positioned to take advantage of rising prices in his flagship hedge fund, the Odey European Fund, and has been trying to warn his investors about the risks of inflation through his annual Read More
Why Leon Cooperman Converted Hedge Fund To Family Office
In my experience there are three main reasons why money managers return LP capital and convert to a family office one they're forced into it because of crappy returns to their Fed of dealing with investors or three they're uncertain or possibly bearish about the prospects for future returns which are those Kapstein fall is. Definitely not the first two and definitely not the first one. Let me just say we investors have been fabulous in their treatment of me particularly.
I went through a very bogus situation with CC and they stood by me and that was a correct decision on their part but it warm my heart. Returns have been very decent. We have beaten all the benchmarks that we compete with and I'm not bearish about 20 you know 18 prospects I would assume that sometime in the 2019 20 20 period we'll have a more market set back that had a small effect. Most people have a soul in this business that are in my end of the industry and money management general care about investors and they care about their performance and really I consider a high watermark meeting to go out when you have a high water mark meaning you've not earned back your losses.
As depriving the investor of an economic asset and as I said in my letter to my investors we're at our high point and I felt that was the right time to step aside and reduce the pressures of performing for clients.
But the truth is it's definitely not the first two explanations and the third is you know a very very very small part of a very small part of it. I just think the time was right. You know and I want to make it very clear to anyone listening this and invest with me. I intend to continue to be involved invest in business for years and years and years I've given lectures at college campuses and high schools and I always say to be successful in life. Do what you love and love what you do. I love what I do. But I do it for myself and not suffer the slings and arrows of outrageous fortune and running the risk of losing my money. Another
way of saying it is you know Warren Buffett to one of his accolades and he says go to work with somebody you respect admire and don't worry about money tap the to work and everything will take care of itself and can tap dance to work for twenty six years it will make it 25 years ago. And I'm just looking forward to the future. LEIGH You mentioned the Sisi family famously I should say.
Battled that regulator which accused you of insider trading and as you point out a number of your clients stuck with you some of them did not. To what degree did the case against Shuli play a role in your decision.
It really didn't. First of all you know I ain't what's called a no admit no deny. So I can't say I'm innocent I can't say I'm guilty but the reality is I'll quote my lawyers to something I'm saying it's incorrect to blame the lawyers the lawyers said one at any time. It goes into a no admit no deny and no time now you leave it at that. The only thing would happen is what the FCC did as they resulted in the institutions that kind of use ashai fiduciaries that don't want to think for themselves pulled their capital they marginalized the business and they handed me a favor because I was running seven million dollars as opposed to four billion dollars. Maybe I wouldn't make this decision but I know in my heart of hearts is the right decision. Frankly the toughest part of this decision. Far and away the toughest part of this decision was a need to resize my staff. I have a team of 35 terrific partners and associates they've done a great job for me.
I give them I think we have on camera I'd be I'd be watching it tear up right now.