The Morning Brief: Omega’s Cooperman Still Sold on Stocks

Leon Cooperman remains positive on stocks. The founder of New York-based Omega Advisors admitted on CNBC on Friday that he was too optimistic last year, when his main fund was down 14.57 percent through November. But he doubts the stock market’s sharp drop is signaling an impending recession. So he remains fully invested. However, he warns investors that now is not a time to buy stocks on margin — with borrowed money. And he is concerned about the crumbling credit markets, with the high yield market all but dried up. But he doesn’t think valuations in the stock market are overheated — given that the average price to earnings ratio is 15 — and he is not worried about the Fed’s future rate hikes ending the bull market, two of the triggers that he says historically end bull markets. “I’m not selling,” Cooperman said. “I’m holding. I believe this is a growth scare rather than a bear market.” After all, it still beats cash, which is still yielding near zero, and government bonds at 2 percent, Meanwhile, Cooperman points out that nearly half of the stocks in the Standard & Poor’s 500 are now yielding more than bonds. ___

The Horseman Global Fund, the long-short equity hedge fund managed by London-based Horseman Capital Management that has been net short for several years now, is among the top performers so far this year amid the global stock market selloff. The fund is up 10.5 percent through January 13, according to HSBC’s weekly list of hedge fund performance figures. Last year Horseman Global gained more than 20 percent, its fourth consecutive annual double-digit gain. The fund has heavily benefited from a big bet going long U.S. Treasuries. At the end of August, the fund, headed by Australian native Russell Clark, was 50.84 percent net short equities and 48.35 percent net long bonds. At the end of November, Horseman increased its net short position to 66.20 percent, mostly by hiking the short exposure. This includes a short exposure of 9.1 percent to the oil transportation sector. Said Clark in his third-quarter letter: “I struggle to contain my bearishness. I suspect we have already entered a global recession, and investors are hoping central banks can do something to save them again.”
Kobe Bryant is apparently not optimistic his Los Angeles Lakers will be able to turn it around and make the playoffs this year. The professional basketball superstar, who is winding down his final year of his career, has agreed to speak at the upcoming SALT Conference, scheduled to take place from May 10 to May 13 at the Bellagio Hotel in Las Vegas. After all, that week is around the time the NBA Conference Semifinals — the second round of the playoffs — are scheduled to be underway. Apparently Kobe thinks that if the Lakers, who have the distinction of holding the worst record in the western conference, do somehow stage a big surge and make the playoffs, they certainly won’t make it beyond the first round.