This content is from: Corner Office

Leon Cooperman Warns a Market Correction Could Come at Any Time

The legendary investor shared his insights Tuesday at the CNBC Institutional Investor Delivering Alpha Conference.

The stock market could see a correction at any time, according to Leon Cooperman, chairman of hedge fund Omega Advisors.

“We could have a five to eight percent correction at any time,” Cooperman said during remarks made Tuesday morning at the CNBC Institutional Investor Delivering Alpha Conference at the Pierre Hotel in New York. He added that a correction could be a result of anything from a disappointing earnings report to threats of a nuclear attack from North Korea.

Cooperman, who considers himself a value investor, shared his top stock picks for capturing alpha. They include two energy companies: Hess Corp. and WPX Energy Inc.

“Energy seems overly discounted in the market,” Cooperman said. “My two picks have a growing production profile.”

His bets rely on the theory that oil prices will increase in the coming months. Cooperman said that if oil prices remain around $40 to $45 per barrel, he’ll not only be wrong about the two stocks, but also wrong about the economy. His view is that if the economy grows, more oil and gas will be used to transport goods and services, pushing prices higher.

“My game is to try to get more for less,” Cooperman said. “I want stocks with more underlying asset value, more earnings growth or more yield. There has to be some combination of statistics that jumps out.”

Following Cooperman’s comments, WPX shares were up 2.1 percent at $10.04 around mid-morning Tuesday, while Hess shares rose 1.3 percent to $41.60 each.

Cooperman added that he likes First Data Corp., an electronic payment provider that was one of KKR’s largest investments in 2007. Cooperman said the KKR-backed company’s 12 percent earnings growth and its low share price makes it an attractive investment.

Cooperman also said pharmaceutical company Shire looks interesting as an investment, despite investor concerns that the market for hemophilia drugs is too crowded. These concerns have driven down Shire’s share price, and that, coupled with its 12 percent growth, is what Cooperman said he finds intriguing about the company.

He also noted that United Continental Holdings is an attractive investment. The airline company has a 15 percent growth rate and is a significant buyer of its shares. As a result, Cooperman said he thinks the stock can reach $100 in the next 12 months. United was trading at $60.55 mid-morning on Tuesday.

Cooperman also remarked on risk-taking in the fixed-income market.

“Bonds to me look like a bubble,” he said. “Everyone is moving out the risk curve.”

Related Content