Hedge-fund billionaire Leon Cooperman does not see S&P 500 above 4,600. Here’s what he is investing in.

The investor then answered his personal query by stating that “20 times is too high relative to the macro environment and relative to interest rates.” He mentioned he’s searching for “things that I like and are mispriced,” noting that traders can discover “many inexpensive stocks” proper now.

The hedge-fund chief in contrast the present market atmosphere to when he began his profession in 1967, as he argued that good points received’t be discovered within the wider S&P 500. At the time, he mentioned, the Dow Jones Industrial Average
DJIA
was at round 1,000. “In 1982 it was roughly 1,000. I made my money picking stocks, and that’s, I think, the environment we’re in,” he mentioned.

Cooperman slammed the prospect of investing in long-term bonds, saying they make little sense “given what’s going on in the world” — at the same time as he thinks rates of interest received’t go decrease however as a substitute “will likely go higher.” 

Earlier this week, traders heard from one other hedge-fund supervisor, Paul Tudor Jones, founder and chief funding officer of Tudor Investment Corp., who mentioned he was steering away from U.S. shares over recession fears and he sees aggressive Federal Reserve coverage as a recessionary set off.

Cooperman mentioned that, whereas he doesn’t “see any major upside in the market,” he sees no “major downside, either, short of a recession,” which he prompt just isn’t doubtless due to “very aggressive fiscal policy.”  

The hedge-fund notable was essential of each U.S. home politics and the financial system, particularly what he sees as a “very disturbing” debt buildup. He famous that many are so fixated on inflation that they will’t see the larger hazard in a possible fiscal disaster, given the U.S. is so depending on others to lend it cash at “attractive prices.”

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Cooperman additionally predicted that the U.S. financial system was going through “shrinkflation,” as shoppers wrestle to maintain up with costs. “And I think what we’re seeing is a monetary illusion,” he mentioned. 

As for the place traders ought to put their cash? He mentioned his first selection consists of his “favorite cheap stocks,” adopted by short-dated Treasurys within the one- to two-year interval, after which long-term bonds are his least favored. 

The storied cash supervisor mentioned there’s little case to be made for investing in long-term bonds providing yields beneath 5.5%, and he’d wait till rates of interest go above 5% to purchase bonds. “In the long term, you’re much better off in stocks and you can find a lot of attractive stocks,” he mentioned. 

Cooperman mentioned he likes Canadian oil and gasoline firm Paramount Resources
PRMRF,
+1.21%,
as he famous the Calgary-headquartered firm at the moment produces oil at roughly $31 a barrel. 

The influential investor mentioned he owns a “bunch of energy stocks,” which collectively represent round 20% of his portfolio, together with oil main Exxon Mobil
XOM,
+3.19%,
which this week struck a deal to amass Pioneer Resources
PXD,
+3.30%
for $59.5 billion, the sector’s largest deal in many years. 

He prompt the Exxon-Pioneer deal may drive additional consolidation within the vitality sector, pointing to Oklahoma oil and gasoline explorer Devon Energy
DVN,
+3.64%
as a doable “candidate.” He mentioned he additionally owns shares in pipeline corporations together with Enterprise Products
EPD,
+0.69%
and Energy Transfer
ET,
+0.44%.
 

Elsewhere, his cheap-stock picks embrace nuclear security firm Mirion
MIR,
+0.14%,
whereas he additionally owns shares in tech giants Microsoft
MSFT,
-1.04%
and Google
GOOGL,
-1.16%,
healthcare corporations Elevance
ELV,
+0.13%
and Cigna
CI,
+3.14%,
private-equity agency Apollo Global Management
APO,
-0.44%,
and Citibank
C,
-0.24%.
 

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