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Will joining us now as billionaire investor Leon Cooperman, Chairman and chief executive officer of the Omega Family Office. Leon, it's such a pleasure. We're super happy to talk to you. Has anything altered your review about investing in US equities over the last few months.
No, really, we've come and we've had a very conservative view, and we continue to have a very conservative view. I don't see the conditions that we suggest the market is attractively valued. I look around the world and I see the market at high at twenty four times earnings, currently around twenty two times earnings, and I look at all the issues out there and multiple seams far too high,
and it's high against current interest rates. I think it just rates are going on the tenure in longer Secty're going to go.
Up, not down, right, So to that point, Leon, I mean we've seen them go up, and we see that that thirty year at five percent. At what point does that get super risky?
Probably now already you know, I have a conservative view of the market, So I don't know what you're talking about now. I'm not going to change my view. I'm negative and I'm looking to become positive, and I think the thing that would make me positive to be honest when stocksacking better in response to bad news. Now, market tops are made on good news, and market bottoms made and bad news, and I'm looking for the news to get worse. And you know, a lot of things I
don't like about the market. I don't like the action cold, I don't like the absence of leadership and government. You know, valuations are too high, and yeah, I think we've bought from the future.
We've well, I am curiously on though.
I mean when we talk about those points, I mean valuations can be corrected, trades and certain assets can be corrected. You mentioned the leadership in washing, and that's not something that at least not as quickly corrected as you can in the markets here. So is this now creating a portfolio to stand the test of time or to stand the test of something that, in your view could just be temporary.
Well, look, all cycles are temporary, you know. You know, economic expansions, so the seats for the next recession. Every recession, so the seats the next recovery. So I look at everything being cyclical, and I'm HARKing back to when I started my career at gold Miss Acts. I got an MBA on January thirty first of nineteen sixty seven, had no money to bank at, a six month old kid to support, and a new wife. Okay, I couldn't take
a vacation. I started my career at Goldman on February first of nineteen sixty seven, and there was one thousand nineteen eighty two. With one thousand, I made my moneyment picking stocks. I think the very base case I see is that environment where the averages don't do anything and the actions to individual stocks. And I find that romantic.
Because the public has been piling into the index, and the index is very expensive, and the individual companies outside the index are much more attractive than the index.
This has become much more of a stock picker's market. I also thought it was interesting just a few weeks ago we heard from Tom Demarca, who of course has advised you in the past. He was successively called the top of this market, and actually was very prescient in calling, at least for what now was the low in April. I am curious about this idea though, of trying to find those individual stocks that are resilient when I look
at your portfolio and they will make up funds. Right now, your top holding is a mortgage company, and I am curious as to how that fits within the landscape of some of the concerns that you have right now, and why it would not be pulled down by those same concerns.
Number one, let me just say this, we have an enormous profit thanks to management of mister Cooper. We put their materially lower prices. We held on to it if we like the management a lot. They're excellent capital managers, and we think this merge with Rocket Mortgage is terrific.
Rocket Mortgage has done a very smart deal here with mister Cooper, and so at seven point eight times that we think they're gonna earn in twenty six and we think it's very cheap relative to the market, with very good capital management, a lot of free cash flow, and we see good growth ahead.
Leon, Sorry, lower two bucks.
It's one hundred and thirty one hundred and twenty five dollars currently.
Leon, you talked about the risks to the US market, but AI is always a bright spot for US market. And you own Google, and you own some energy companies that have exposure to AI data centers like Vertive, for example, how do you look at that? Is that pure AI data center play or is it something else?
For you guys, I look at with suspicion. In February of this year, all the conditions for the top were in. Now all the Wall Street strategists were raising up your estimates for the year. Now they're busy lowering them for the year. And in addition, you saw the crowding into technology stocks which now are bunderperformed so far this year. And it was a great deal of optimism. Investor optimism was at a record higher. The sinemon has turned very dramatically.
Sentiment is very negative. So the only reason I wouldn't be overly negative now is, you know, because I think that everybody's negative.
And where do you think the data center trade though, has still overdone it?
Well, I'm very response to intervinal names. We are in Revertive, which we think the world of management have done a great job, and we think the stock's attractive. If I don't know, I don't know much about it, you know, we gotta stick away. Maybe I can talk about the newest selections. So we recently aired Atlas Energy Solutions to our portfolio. You know, this is a very well run company. Of the CEO, the founder is uh bud I think give me a second.
The CEO John right, John Turner, No, no.
Hey, Atlas Energy. The CEO chairman of the board. I guess I'm not sure his title is uh uh ben uh uh.
Well yeah, yeah, well you could you could keep find finally, but I mean, maybe just expand a little bit more on that, because I mean you seem to be hitting on some key areas here, some key themes about bottom up stock taking.
Then clearly a big focus on leadership at these companies and the ability to navigate this environment.
So when you talk about.
Flow and intelligent use of the free k flow.
Okay, and that includes Ashland Energy Transfer some of the other names like that.
Yeah, absolutely absolutely, And again you know, we're very attuned to what we pay for stock nity trades. We were buying his lower six dollars less sales eighteen dollars. We pay taxes, so I don't look to turn over the portfolio for no reason. So we tend to be a holder of things, but not quite as transient as Warren Buffett, as good as he is, but the guy who makes cuotes the big shuts and as Energy had three energy
companies before he sold a nice profit. And if you check inside Training on Bloomberg, you can see that significant purchase of stock by management. And when guys make money and they're buying stock for themselves, they're buying stock for the company, and you think it's cheap. You know, we get motivated. So it's ten and a half times, so we think they're going to earn next year. It's high to energy. But if you look what's going on around the world, energy is not a bad place to be.
What about outside of the US. Are there opportunities? Do you even look outside the US for investment opportunities?
Look much? Because but I'm not a good person to ask that question too, because you know, we're running a small family office. We're very big on management contact, and
so it's discourages to give outside the United States. So recent purchases I mentioned, you know, as Energy, I would mention ge Healthcare thirteen point three times, earnings growing we think twelve percent signing very reasonable multiple thirteen point three times, and I like the insurance company Fidelis, you know, twenty dollars plus book value, hard market for insurance buying backstock, Well, I think they can earn twenty percent in equity. That
means that have four hours earnings potential. And when we get out of a catastrophic environment, you know, a normal you know, catastrophe a year current four bucks buying backstock excess capital, you know, So if I pig discount to other insurance companies because you deal.
Leon, what's your biggest concern right now? Like I see the individual stocks that you're talking about, but in general, when you wake up in the morning, what worries you?
Well, when I gap in the morning, I worry much about. I support an organization called Kindness Matters three sixty five. What I'm very disturbed about is our fiscal condition and an inability to have the two parties work together cooperatively to deal with this. And we're heading to financial disaster. Even if new budget proposal it's a tax and spend kind of thing, it's not dealing with the deficit. Deaf
is two trillion dollars. It's just too high. Debt outstanding is ridiculously high, and nobody's focused on it, and we're going to have a financial crisis unless they start space now on it. And the bomb market is going to get them to focus on it. You know, we have a system of leadership in the country. It's leadership add of crisis. When not the crisis, therefore is no leadership. They argue with each other. It's kindness matters. Takes kids off the streets at age three and four and they're
teach them the importance of kindness. And these people talk to each other in such rude fashion. It's very discouraging.
With regards to the budget and our deficit and the fiscal situation. Leon does the market have the ability to really push back.
Well, the bond vigilante sure could push back. You know, it got to go back to the market, get get capped out by interest rates. Interest rates are not going up. If interestrates are not going to go up, then the stock marketd be okay. But I think interesstrates are going to climb higher.
How high do you think they go?
I know a lot higher now prior to two thousand and eight, to tenure government bond yielded and align with nominal GDP. If you have real growth of a couple percent and you have inflation of three or four percent, the tenure could be is up to six percent or higher. Wow, and you have a capital loss and the coupon is sufficiently low that you'd have a loss of principle. So I guess yeah. I think their individual stocks are cheap road to the bunts, even though the market as a
whole is expensive. Roads to the buns.
But that puts us back, potentially leon into territory where we're almost talking about double digit percentage yields in order to compensate for that deficit, for that debt servicing costs. What would that even mean for the economy and more importantly for financial markets.
Well, I think that if they deal with the deficit, it's negative for growth, right, you say, it retwards growth and consumption. And I think my theme is that we've run a very inappropriate fiscal policy. I don't blame the President Trump. I actually say he's not doing it the right way in my opinion, but he's doing the right things. It's very, very difficult to you know, comprehend now. Maybe I've had a lot of medical issues the last two months.
I've had a lot of meetings with doctors and hospitals and stuff like that, and you know, I haven't gotten the bill. I like that, But the fact of the matter is maybe everything should be more means tested. I think the wealthy people should be paying more in taxes, not less.
Well, I'm sorry to hear that. For you, Lean, I hope you're doing better now before we let you go. What excites you now? And ending on this negative note, it's not in a positive note. What gets you going in the morning.
What excites me is buying and mister Cooper and having a go from six seven eight to one hundred and twenty five. Its excites me not because I'm greedy personally. Oh my money is here mark for charity. I've taken two giving pledges when we're Warren Buffett to give it half my money to non Jewish causes, the other half with Mike Levin, my friend who is a Jewish giving pledge. So I like making money for two reasons. If I lose mind, it means I'm wrong and I have an
ego like everybody else, And that's number one. Number two reasons I like making money is I like to give away more money. It's my own envy of people like Bill Gates and Bernie Marcus who recently passed away, as they had a lot more money to give away. And my hero in life is ken Lango, who was very generous. Love to good luck, all right, I like making money for those two reasons.
All right, Leon, Well, we really always love talking to you and we wish you the best, and of course that will be keeping an eye on your charitable endeavors as well, and always great to get your thoughts on what's going on in the markets, in the economy and the books.
Mike Flundberg, he's another generous guide.
He certainly is, we know, and I'm sure he'll appreciate that thought and we'll pass it along to him. He's sitting right behind us, actually I will, Leon.
Who I was registered independent for many years and when he ran for prison as short as his run was, I switched to the Democratic Party so I could work and support him. But unfortunately he dropped out very quickly.
Yeah, all right, Leon Cooperman chairman, chief executive officer over at the Omega Family office, and of course spent a lot of time over at Goldman Sechs asset Management.