Leon Cooperman understands investing comes with a lot of ups and downs. “In this business, if you don’t make mistakes, you’re either a liar or you don’t take many swings at the ball,” he once said.
The billionaire swung and missed in 2014. In a letter to Omega Advisors investors, he called the firm’s performance for the year “embarrassing.” Despite bumps in the road, Leon Cooperman’s investment career, over the long haul, has been nothing short of outstanding.
Life and Education
Leon Cooperman was born in the South Bronx, New York and is the son of Polish immigrants. His father was a plumber. The first in his family to earn a college degree, he attended Hunter College as an undergraduate and received his MBA from Columbia Business School.
After Hunter, Cooperman went to work at Xerox as a quality control engineer, though he soon decided to shift his attention to business. While at Columbia, the now-billionaire fell in love with stock picking.
Cooperman joined Goldman Sachs in 1967, right after graduating. Less than a decade later, he became partner in charge of research. For nine consecutive years, he was voted the number one portfolio strategist the Institutional Investor All-American Research Team survey. He helped Goldman to set up its asset management unit, of which he became chairman and CEO.
After 25 years of service, Leon Cooperman left Goldman Sachs to launch his own venture. He founded Omega Advisors in 1991.
At Omega Advisors, Leon Cooperman employs a classic value strategy. He and his team perform intensive research to identify undervalued American stocks.
A 2014 profile on the billionaire by Lawrence Delevigne describes Cooperman’s strategy:
While Cooperman mostly looks at micro company developments, he uses macroeconomic analysis led by longtime top deputy Steve Einhorn to inform how much risk to take and when to dabble in other asset classes, like international stocks, bonds, currencies, commodities and equity indexes. The firm also takes positions against some overvalued stocks using short bets, but the vast majority of its historical profits have come from the long side. . . .
Leon Cooperman’s Omega Advisors currently boast $9.4 billion in assets under management. The billionaire’s flagship fund, Omega Overseas, averaged returns of 14.6%, after fees, from January 1992 through June 2014. Some years have been better than others.
In the 2000-2001 market collapse, Omega made money because, according Cooperman, it stuck with value. “You only got creamed if you were buying these 100x revenues technology companies,” he said in a 2011 interview.
The 2008-2009 crisis, however, was a different story. “So it was really 2008 that was a rough patch for us and it was very simple,” he said. “We misjudged the significance of Lehman. As I mentioned, 2008 was transformative for me because, at the time, I allowed my people to hold onto their positions when I should’ve started kicking them out well before we got into the hole.” Omega lost 35% that year.
But 2008’s losses have been wiped out by other big years for Cooperman. He racked up enormous gains in 1993, 2003, 2009, 2012 and 2013.
“Don’t confuse a bull market with brains.”
“You have to respect the stock market. If you don’t, you’re going to get wiped out.”
“What the wise man does in the beginning, the fool does in the end.”