Leon Cooperman’s Omega Advisors Continues to Suffer from Redemptions

Performance at the veteran manager’s funds is mostly unaffected, but assets have taken a big hit since the Securities and Exchange Commission filed insider trading charges against the firm.

Bloomberg Link Hedge Funds 2010 Conference

TKTKT speaks during the Bloomberg Link Hedge Funds 2010 conference at the Guggenheim Museum in New York, U.S., on Thursday, Dec. 2, 2010. Hedge funds attracted a net $19 billion of new capital in the third quarter, the most since the end of 2007, as they returned to their peak asset value before the financial crisis. Photographer: Jin Lee/Bloomberg *** Local Caption ***

Jin Lee/Bloomberg

Hedge fund legend Leon Cooperman and his firm, Omega Advisors, suffered another steep drop in assets in December as the fallout from the Securities and Exchange Commission’s civil charges against the firm continues.

The New York hedge fund firm reported that its assets under management declined by 27 percent in December alone, to $3.4 billion, from $4.7 billion the previous month.

Assets have nearly halved from $6.7 billion at the start of the year and have plunged 64 percent over the past two years.

In September, the SEC accused Cooperman and his firm of trading in the securities of Atlas Pipeline Partners, a Pennsylvania-based oil and gas company, while in possession of insider information, as well as violating other SEC regulations. (Omega received a Wells notice, a notification that the SEC is planning to file enforcement charges, in March.)

While the firm’s assets have taken a big hit since the charges were filed, the government’s lawsuit has not had a big impact on Cooperman’s investment team. In 2016, Omega Capital, which invests in all of the firm’s strategies, returned 8 percent. Gains came primarily from its credit strategy, which returned 16 percent, while its equities strategy added 10 percent, according to an individual familiar with the results.

For his part, Cooperman is determined to fight the SEC’s charges and go to trial in order to secure his legacy. “Let me state unequivocally and emphatically that the firm and I did not engage in insider trading,” Cooperman, who has been running Omega for 25 years, told his investors during a conference call in September. “The charges against us are entirely baseless, and we intend to defend ourselves in court.”

In any case, all of Omega’s ten-largest long U.S. equity positions at the end of the third quarter were long-term positions established in earlier years. This underscores Cooperman’s assertions, in his public responses to the government’s charges, that he is a long-term investor.

Omega’s best performer among its major positions in 2016 was Navient, its second-largest long. Shares of the student loan servicing company surged about 44 percent last year. Diversified holding company HRG Group, its fourth-largest long, rose 14 percent for the year. It sells a wide variety of consumer products as well as insurance. Another winner was insurance giant AIG, which surged nearly 25 percent. Other major positions rose by slow single-digit rates, such as Alphabet and Tribune Media Company.

On the other hand, credit card processor First Data, Omega’s largest long, lost nearly 11 percent last year. Aircraft leasing giant AerCap Holding, its third-largest long, slipped 3 percent.