Cooperman still sees room to make money in stocks
* Says there is a potential for social unrest in U.S.By Katya WachtelNEW YORK, Oct 18 (Reuters) - Even as the stock market is
off this year, there are still plenty of ways to make money
there, hedge fund industry titan Leon Cooperman said on
Tuesday.Cooperman, who runs Omega Advisors and has been picking
stocks professionally for more than four decades, said the
United States will likely face slow growth for some time and
warned that protests against Wall Street should be watched.”Stocks are cheap relative to history, cheap relative to
interest rates, and cheap relative to inflation,” Cooperman
said at the Value Investing Congress.”With a little bit of patience we can make a lot of money.”
He listed KKR , E*Trade Financial Corp ., Apple and Transocean as some of Omega’s favorite
plays.While his fund has lost 12 percent his year, Cooperman said
investors, especially those who select unloved companies, have
to be patient. On the other hand he also said there are
investments that look very unattractive now.”I wouldn’t be caught dead holding a U.S government bond,”
Cooperman said. “They make no sense. The historical time to buy
bonds is when the yield curve is inverted.”As protests over the financial system pick up steam and
global growth remains lackluster, Cooperman also warned that
the potential for social unrest must be taken seriously.High unemployment had been a trigger for social unrest
around the world this year and could cause problems in the
United States as well, he said.He mentioned “Zucotti Park issues” - a reference to an
encampment of Occupy Wall Street protesters in a park in lower
Manhattan, as proof.”There is potential for social unrest and we have to watch
it very carefully,” Cooperman said.Cooperman is one of only a small number of Wall Street
executives to publicly express concern for the protesters’
issues as they charge the financial system favors rich people
over everyone else.Known for veering into political topics, Cooperman said
that unhappiness in the United States is so great that
Americans sent a 48-year-old man who has never worked in
business to be the leader of the free world.Cooperman has been a vocal critic of President Barack Obama
and joked that he himself has a platform to run for President
— although he then said he has no plans to launch a campaign.”There is a saying that when there is a president in
trouble, we have a market that’s in trouble,” Cooperman said.
“And we have a president that’s in trouble.”The hedge fund manager also blasted high frequency traders.
“High frequency trading has turned the market into a casino,”
Cooperman said. “They’ve scared the public out of the market.”
UPDATE 1-Hedge fund woes don’t slow stock pickers’ meeting
* Big interest in rubbing shoulders with famous tradersBy Svea Herbst-Bayliss and Katya WachtelNEW YORK, Oct 17 (Reuters) - Poor performance does not seem
to be much of a hindrance when it comes to investors shelling
out thousands of dollars to hear famous hedge fund managers
share some of their wisdom about picking stocks.Beginning on Monday, some 600 people who have written big
checks will attend the 7th annual Value Investing Congress in
New York. The two-day event is a chance for investors,
lesser-known money managers and financial advisers to rub
shoulders with William Ackman, David Einhorn, Jim Chanos, Leon
Cooperman and other titans in the $2 trillion hedge fund
industry.This year’s conference, after offering some steep discounts
on tickets initially priced at $4,000, is fairly well-attended,
even though many of the featured speakers are nursing hefty
losses.In fact, the conference’s principal organizer, Whitney
Tilson, is the manager of T2 Partners, a small hedge fund that
is down 30 percent for the year. Ackman’s $10 billion Pershing
Square Capital Management is down 16 percent for the year.But those attending the conference did not seem to mind
that many of the speakers were having off-years. Maybe that has
something to with the fact the Value Investing Congress is
focused on managers who specialize in finding stocks that are
unloved with payoffs that can be years down the road.”Value investors tend to look longer ahead than a hedge
fund guy and maybe they are more forgiving,” said Jason
Slocock, a private investor who came from London.ANOTHER CUP OF JOEThen again, the biggest buzz during the first day of the
conference did not come from a manager identifying a beaten-up
stock to buy. It came when Greenlight Capital founder David
Einhorn, whose $8 billion fund is down 6 percent this year,
told the crowd about a stock he was betting against.Einhorn wowed the crowd with the news that his fund was
selling short shares of Green Mountain Coffee Roasters Inc , a company that not too long ago was a darling stock
of the the hedge fund set. Some of the coffee company’s early
boosters included John Thaler’s JAT Capital and Philippe
Laffont’s Coatue Capital. William Danoff, a top mutual fund
manager at Fidelity Investments, also liked the stock.Green Mountain shares immediately plummeted 10 percent on
the news Einhorn was shorting it because of concerns about the
company’s accounting practices and business prospects.”If you get one usable idea it can pay off handsomely and
pay for conferences for the next 20 years,” said Allen Benello,
a portfolio manager at hedge fund White River Partners in San
Francisco.Still, the ideas being touted here are hardly exclusive as
they are now available not only to hundreds of other conference
attendees, but also to anyone with an Internet connection.
Indeed, news of Einhorn’s short bet was a hot topic on Twitter,
even as the manager was still going through his lengthy
presentation.Many at the conference were waiting for Tuesday’s
presentations when Ackman, one of the industry’s biggest stars,
is scheduled to speak.Chanos, a famed short-seller warned investors on Monday not
to simply chase a beaten down-stock believing it has hidden
value. His presentation to the paying crowd was called: “Beware
the global value trap!”Chanos, who runs Kynikos Associates, said: “If I can’t work
out how a company is making money after reading their 10K three
times, we open a file on it.”Other featured speakers included Cooperman, whose Omega
Advisors is down 12.36 percent, and Eminence Capital’s Ricky
Sandler, whose fund is off 6.53 percent this year. The list of
speakers even included Vladimir Jelisavic, co-founder of
Longacre Fund Management, a one-time $800 million fund that
recently announced plans to liquidate because of poor
performance.GENIUSES AMONG USEven with those sorry numbers, investors said the
conference offers attendees a chance to walk among greatness.”You have ideas here you don’t get in the office,” said
Brian Cann, who works at RBC DS Private Investment Management
in Ontario. “It is like when you can be sitting there for hours
and nothing happens and then you and your colleague go to the
pub and suddenly you have 42 new ideas.”Conference organizers said this year’s attendance beat last
year’s event. But organizers had to offer heavy discounts off
the original ticket price to woo people to come.
On the Move: Ameriprise hires adviser out of RBC
Bruce McGaugh, 60, joined Ameriprise’s Houston office on
Friday after six years at RBC, where he served as senior vice
president of the firm’s wealth management unit.McGaugh said his close ties to Ameriprise’s Texas regional
head Darrell Reese, who also left RBC earlier this year, had
influenced his decision to move.”I was sold on the two men who run the Texas division,”
said McGaugh, who previously worked with Reese at RBC and with
Ameriprise’s other Texas regional head Jim Flewelling at UBS
Financial Services Inc prior to that.McGaugh manages about $90 million in assets and said he
expects to bring over most of his clients.McGaugh, who has been in the advising industry for nearly
three decades, focuses on municipal bonds, annuities and
exchange-traded funds.
Thousands protest banks, corporate greed in U.S. marches
Inspired by the Occupy Wall Street movement, protests on Saturday started in Asia and rippled through Europe back to the United States and Canada. Protesters fed up with economic inequality took to the streets in cities from Washington, Boston and Chicago to Los Angeles, Miami and Toronto.After weeks of intense media coverage, the size of the U.S. protests on Saturday have been smaller than G20 meetings or political conventions have yielded in recent years. Such events often draw tens of thousands of demonstrators.In New York, where the movement began when protesters set up camp in a Lower Manhattan park on September 17, organizers said the protest grew to at least 5,000 people as they marched to Times Square from their makeshift outdoor headquarters.”These protests are already making a difference,” said Jordan Smith, 25, a former substance abuse counselor from San Francisco, who joined the New York protest. “The dialogue is now happening all over the world.”The protesters chanted, “We got sold out, banks got bailed out” and “All day, all week, occupy Wall Street.” They arrived in Times Square at a time when the area is already crowded with tourists and Broadway theatergoers.”This is disgusting” said Anatoly Lapushner, who was shopping with his family at Toys R Us in Times Square. “Why aren’t they marching on Washington and the politicians? Instead they go after the economic lifeblood of the city.”PARTY MOOD IN NEW YORKAmerican protesters are angry that U.S. banks are enjoying booming profits after getting bailouts in 2008, while many people are struggling in a difficult economy with more than 9 percent unemployment and little help from Washington.Some were disappointed the New York crowd was not larger.”People don’t want to get involved. They’d rather watch on TV,” said Troy Simmons, 47, who joined demonstrators as he left work. “The protesters could have done better today … people from the whole region should be here and it didn’t happen.”The Times Square mood was akin to New Year’s Eve, when the famed “ball drop” occurs. In a festive mood, protesters were joined by throngs of tourists snapping pictures, together counting back from 10 and shouting, “Happy New Year.”Police said three people were arrested in Times Square after pushing down police barriers and five men were arrested earlier for wearing masks. Police also arrested 24 people at a Citibank branch in Manhattan, mostly for trespassing.Citibank was not immediately available for comment.Five thousand people marched through the streets of Los Angeles and gathered peacefully outside City Hall.The Occupy Wall Street movement has been gathering steam over the past month, culminating with Saturday’s action. The protests worldwide were mostly peaceful apart from Rome, where the demonstration sparked riots.But it was unclear if the movement, which has been driven using social media, would sustain momentum beyond Saturday. Critics have accused the group of not having clear goals.In Toronto, a couple of thousand people gathered peacefully and started to set up a camp in one of the city’s parks. Protesters in Washington marched through the streets.”I am going to start my life as an adult in debt and that’s not fair,” student Nathaniel Brown told Reuters Television. “Millions of teenagers across the country are going to start their futures in debt, while all of these corporations are getting money fed all the time and none of us can get any.”
TEXT-S&P:LG Electronics downgraded to ‘BBB-’ on weak performance
— LG Electronics has posted continuing operating losses in its handset and
display panel businesses and registered worsening debt to EBITDA and continuing negative free
cash flow.— We have lowered our long-term corporate credit rating on LG Electronics Inc. to ‘BBB-’
from ‘BBB’ and our senior unsecured debt rating to ‘BBB-’ from ‘BBB’.— The stable outlook reflects our view that the company’s financial performance will
gradually improve in 2012 and beyond, underpinned by the competitive positions its major
consumer electronics businesses occupy globally.Standard & Poor’s Ratings Services today lowered its long-term corporate credit rating on
Korea-based LG Electronics Inc. to ‘BBB-’ from ‘BBB’. At the same time, Standard & Poor’s also
lowered its rating on LG Electronics’ senior unsecured debt to ‘BBB-’ from ‘BBB’. The outlook on
the long-term corporate credit rating is stable.The downgrade mainly reflects the company’s weakening operating performance and worsening
financial risk profile on a fully consolidated basis, including LG Display Co. Ltd.
(NR) and LG Innotek Co. Ltd. (NR).We expect LG Electronics group’s profitability to remain weak in 2011, mainly due to losses
in its handset and LCD panel businesses. LG Electronics Inc. has posted operating losses in its
handset business since the second quarter of 2010, due to a sharp decline in handset sales and
the late launch of its smartphone products. LG Electronics Inc.’s share of the global handset
market dropped to about 7% in the first half of 2011 from about 10% in 2009, largely because of
weakness in smartphone sales. It has also recorded operating losses in its LCD panel business
since the fourth quarter of 2010 because of weak demand and low prices for flat panel TVs
globally. We expect LG Electronics group’s operating margin in these businesses will not turn
positive for at least a few more quarters.We expect LG Electronics group’s adjusted debt to EBITDA to rise to above 3.0x in 2011 from
about 2.5x in 2010. Despite weak earnings performance, the group needs to continue research and
development and capital spending to maintain its global competitiveness, which could result in
negative free cash flow at least in the near term.The stable outlook reflects our view that LG Electronics group will gradually improve its
financial performance in 2012 and beyond, based on its competitive positions in markets for
digital TVs, home appliances, and LCD panels. Also, increasing revenues from premium products
such as 3D TVs, smartphones, and high-end LCD panels should help sustain LG Electronics group’s
current business risk profile. We also expect its position in the global smartphone market to
gradually improve on the back of its relative strength in hardware technology but it still
remains to be seen whether LG Electronics Inc. can overcome intensifying competition and
volatility inherent in the handset industry.We may lower the ratings on LG Electronics Inc. if the LG Electronics group’s operating
performance weakens further, mainly due to intensifying competition and weaker-than-expected
global demand, resulting in a deterioration in its financial risk profile, such as consolidated
debt to EBITDA in excess of 3.5x. On the other hand, we may raise the ratings if the company’s
earnings performance materially recovers, especially in its handset and LCD panel businesses,
and, as a result, consolidated debt to EBITDA eases to less than 2.5x on a sustained basis.
