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Leon Cooperman Doesn't See Big Upside Potential For The Market Right Now

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Leon Cooperman Doesn't See Big Upside Potential For The Market Right Now

Leon Cooperman of Omega Advisors shared his view about the stock market's direction with the viewers of CNBC's "Fast Money Halftime Report."

The 2,187 level in the S&P 500 represents the low for the cycle, Cooperman said, adding that he doesn't predict big upside.

Many problems lie ahead, the CEO said, adding that corporate earnings are going to be less than people would have expected; demand will likely return slowly; there is more debt to be serviced; and more compliance costs.

Companies are likely going to use equity issuance to replace lost capital and end stock repurchases for the foreseeable future, Cooperman said.

Investors should keep in mind that margins are mean reverting and were at record highs in January, he said. 

See Also: Leon Cooperman Weighs In On Chamath Palihapitiya's Take On Government Bailouts

Cooperman's Predictions For S&P 500

The fair value for the S&P 500 is 2,550, Cooperman said. 

The market is a little bit ahead of economic fundamentals at the present time, and we won't see a new high anytime soon, he said. 

The only argument for Piper Jaffray's forecast of the S&P 500 reaching 3,600 is low interest rates, the CEO said.

Interest rates are low because of the problems in the economy,  Cooperman said.

Cooperman's Stock Picks, Pans 

When it comes to the COVID-19 pandemic, Cooperman sees some positives, as case loads are peaking and more people are being discharged than are being admitted, he said. 

It is going to take some time to fix the problem, and the country is not going back to normal soon. 

Cooperman said he has a big position in Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG), Amazon.com, Inc. (NASDAQ: AMZN), Trinity Industries Inc (NYSE: TRN) and Microsoft Corporation (NASDAQ: MSFT).

He is overweight the energy sector, which he sees as a mistake from the current perspective.

Cooperman said the market will knock out marginal energy companies, adding that he owns companies that can make money at the $25-per-barrel level.

In the financial sector, Cooperman said he owns JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc (NYSE: C).

Loans demand is going to be strong, and the dividend is safe for these banks, he said.

Cooperman said he sold United Airlines Holdings Inc (NASDAQ: UAL) and sees the experience as very painful.

The CEO said he is a realist, as the airlines are losing a lot of money and it is going to be a while before the industry comes back.

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