market folly

Barry Ritholtz's podcast on Bloomberg Radio called Masters in Business recently featured an interview with Omega Advisors' Lee Cooperman.

You can listen to the full interview here but we wanted to offer a few quick takeaways:

- He attributes his success to a combination of hard work, education, and luck.

- The only place he feels is a bubble currently is fixed income and interest rates are going higher

- Ritholtz mentioned research he's done on stock market returns when rates are rising. He noted that the only time stocks didn't do so well was when you're raising rates from already high levels and with inflation.  He says that when you're starting from a low base (like we are now), that returns tend to be favorable and Cooperman agreed.

- Cooperman looks at a top down macro level to survey the land and then drills down to specific companies.  He looks for "more growth at a lower multiple."

- He loves what he does and consumes content all the time.  He's always reading about companies, industries, macro stats, and meeting with other investors or companies trying to get a feel for how things are going and what will happen going forward.

- Cooperman is long Japan via the indexes rather than individual stocks because he doesn't have individual expertise there, but he has a macro view on the country and has expressed it as such.

- When a stock moves against him, sometimes he doubles down, sometimes he sits tight, and sometimes he sells.  It really depends on the specific situation.  If something has tangibly changed, you've got to make a different decision. 

-  "What is your sell discipline?"  1.  If it hits our price objective, even without circumstances changing, they sell.  2.  Not everything unfolds the way you anticipated, so get out.  3.  If you find a better idea, switch the capital there.  4.  If they change their view on the market and want to reduce exposure.

- On hedging: "We tend to be long-oriented.  Our short positions tend to be 5-15% of the fund.  We don't run a big gross book and a small net book, I find that very difficult."

- Average holding period:  Half our asset base is taxable, so we try to focus long-term.  75% of our investments have a horizon of over a year.

- For people looking into the business, his advice:  get a good education, don't go into a field just for the money, go to work for someone you respect and admire to build a good foundation.

- On what he knows today that he wished he knew when he first started: He wish he would have started his hedge fund earlier.


We've highlighted some of Cooperman's recent portfolio activity here.