The annual Delivering Alpha Conference, hosted by CNBC and Institutional Investor each year in New York City, has arrived. A host of speakers from the top echelons of the investment world took the stage before an audience of investment professionals and journalists, sharing their opinions and views on a wide range of subjects. This year’s conference is the seventh iteration of the event, and promises to provide analysts and investors across the country with plenty of useful information and feedback. One of the early speakers of the day was Leon Cooperman, the chairman of Omega Advisors. Cooperman spoke of stock market valuations and other topics to a riveted audience.
‘Full But Fair’ Valuations
On the U.S. stock market, Cooperman described his opinion that current valuations are “full but fair.” He expected that the usual causes of market corrections were “either not present, or not predictable,” suggesting that speculative valuation, exuberance, and an impending recession were warning signs that he did not feel were present today, according to the Market Watch blog.
Still, Cooperman feels that it’s not an ideal scenario for investors: “we have optimism, but few signs of euphoria,” he explained. This echoes comments from Goldman Sachs’ leadership, who shared in Cooperman’s view that underlying interest in stocks was a reason why a future imminent decline in the markets would be unlikely.
Still, geopolitical crises are events which can come out of nowhere and immediately have a negative impact on the markets, Cooperman reminded listeners. “You can’t forecast that, but there’s plenty to worry about,” he explained.
Bonds ‘Look Like They’re in a Bubble’
Speaking on the bond market, Cooperman suggested that bonds “look like they’re in a bubble,” and that the Fed has been using monetary policies to “[force] people into risk.” He predicted that this situation is “going to change one day, but not yet.”
Top Equity Picks
Cooperman also shared some of his top equity picks, including Shire PLC (SHPG) as a choice for its levels of growth, expected stock repurchases, and other factors. Cooperman also highlighted United Airlines (UAL) as a top choice, based on its management being “among the best in the sector.” He expects the stock to grow operating profits by as much as 50% in the next two years, noting that the company has repurchased roughly 2% of all outstanding shares.
Finally, Cooperman pointed to energy as a sector which “seems overly discounted” for the time being. He specified two companies in particular: Hess Corp (HES) and WPX Energy (WPX) as companies with net asset values above their current stock prices. He expects that Hess may see a 10% increase in production in the year to come, even considering current oil prices.