Tags: Cooperman | Einhorn | Ackman | Investing

Cooperman Debunks Bear Scenario; Einhorn Meets the Frackers

By    |   Tuesday, 05 May 2015 05:59 AM

Some of the leaders of Wall Street appeared at the Sohn Investment Conference to discuss provocative and sometimes controversial ideas.

In the first clip, Leon Cooperman, CEO of Omega Advisors told CNBC’s Scott Wapner the speculation about when the Fed will raise interest rates “somewhat misdirected.”

He reassured investors that a rally could persist for a considerable time, between 10 and 30 months, with the market rising an average of 9.5 percent after rates are raised, if they are.

Furthermore, he laid out a useful test of the signs of a bear market, none of which he see in the current market:
  • the market anticipating a recession;
  • stocks overvalued;
  • geopolitical concerns, such as the Cuban missile crisis of 1962;
  • a hostile Federal Reserve.

This writer would point out that far from hostile, the Fed has sponsored this bull market and would probably rescue it if the need occurred, perhaps by buying stocks for its own portfolio.

In the second clip, David Einhorn, CEO of Greenlight Capital, made a crisp, entertaining presentation of his highly negative view of the fracking industry’s business model.

In the process he assailed the use of non-traditional, non-GAAP metrics, such as “Ebitdax,” which stands for “earnings before a lot of stuff, which have been used to support the industry case.

He advised investors that, “When someone doesn’t want you to look at traditional metrics, that’s a good time to look at traditional metrics.”

This writer would add that metrics with awkward names such as “Ebitda” seem to be a holdover from the dotcom bubble, and it’s amazing that they are still used 15 years after that bubble burst.

Other commentators criticized Einhorn’s thesis as subjecting diverse companies to the same critique, and they contended that some of the companies are well hedged against the decline in oil prices, even to the extent of $90.

Finally, William Ackman, of Pershing Square Capital, reiterated to Wapner his assessment that Herbalife (HLF), which would report earnings the next day, will eventually fail, although he lamented that the campaign has been a costly one from the point of view of the firm’s investors.

He recalled that short selling played a useful role in exposing the housing bubble once investors were permitted to short housing stocks.

It should be noted that the company also has staunch defenders, most notably another Wall Street legend, Carl Icahn.

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Some of the leaders of Wall Street appeared at the Sohn Investment Conference to discuss provocative and sometimes controversial ideas.
Cooperman, Einhorn, Ackman, Investing
Tuesday, 05 May 2015 05:59 AM
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