Lee Cooperman's 4 Long Ideas at Invest For Kids Chicago ~ market folly

Wednesday, October 30, 2013

Lee Cooperman's 4 Long Ideas at Invest For Kids Chicago

Next up in our notes from Invest For Kids Chicago 2013 is Lee Cooperman of Omega Advisors.  He pitched four long ideas and gave his outlook on equities in general.

Lee Cooperman's 4 Long Ideas at Invest For Kids Chicago

•    Equities still best house in neighborhood but not as solid as 2011
•    Sallie Mae worth $32
•    Market in zone of fair valuation
•    All about multiple you assume for the market
•    15 to 16 multiple is fair so market reasonable fully valued
•    Series of numbers – S&P up 23% jumps out at investors
•    Close to 3 multiple expansion the last few years
•    Bull markets don’t die from old age they die from recessions
•    Bonds overvalued & people in process of going out risk curve
•    Stock very cheap relative to fixed income
•    1 to 3% inflation then 16ish multiple makes sense
•    HY index at 6% versus 25%
•    HY has no great fascination at the present time
•    1958 yield revered – bonds versus stock – quarter of S&P 500 now yield more than (government) bonds
•    Wouldn’t be surprised to see the 10 year bond at 5%
•    Bull markets end at overvaluation; 2nd phase of bull market - rising earnings rising dividends (currently late here); 3rd & final: exuberance/excess.  (We've posted Cooperman's 3 stages of a bull market before if you missed it)

•    Negative if (1) recession (2) valuation at danger zone – if go up 10% then we would be at this place (3) growth less than 1% or more than 3% (fed tapering),
•    Doesn’t believe PEs are materially higher – profit margins cyclical

•    Idea #1: Atlas Energy MLOP (ATLS)
o    “More of everything – dividend of 2x S&P.
o    Trading way below sum of the parts o    On top of 2 other publically traded MLPs
o    Thinks it’s worth $60
o    Cheap relative to comps
o    No CapEx and lots of FCF

•    Idea #2: Monitise (London), a position we've highlighted on the site numerous times before
o    1.5 billion dollar market cap
o    Mobile wallet – software on phone that enables online bill pay
o    Blessing of Visa Europe & options of 20% of company
o    “Central to Visa Europe’s philosophy”

•    Idea #3: Sandridge Energy (SD)
o    “Bit of a turnaround”
o    Omega believes NAV is $10 per share

•    Idea #4: Sprint  (S)
o    Biggest position in history of firm at $2.
o    Still cheap now 
o    EV to sales and EV to paid sub is paid sub
For an in-depth look, we previously posted Omega's thesis on Sprint Nextel from their Q2 letter this year

Check out the rest of the hedge fund presentations from Invest For Kids Chicago here.

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