| WHEN: TODAY, WEDNESDAY, JANUARY 2ND WHERE: CNBC'S "FAST MONEY HALFTIME REPORT" Following is the unofficial transcript of a CNBC interview with Omega Advisors Chairman Leon Cooperman today on CNBC's "Fast Money Halftime Report." Additionally, here are links to embeddable videos of the interview: http://video.cnbc.com/gallery/?video=3000138725 and http://video.cnbc.com/gallery/?video=3000138538. All references must be sourced to CNBC. |
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| WAPNER: LET'S BRING IN A MAN WHO EASILY BEAT THE MARKET IN 2012, LEON COOPERMAN OF OMEGA ADVISORS IS LIVE ON THE PHONE, WELCOME, HAPPY NEW YEAR. IT'S GREAT TO HAVE YOU BACK ON HALFTIME. COOPERMAN: HAPPY NEW YEAR TO YOU AND EVERYONE ELSE ON THE SHOW. WAPNER: I APPRECIATE IT VERY MUCH. WELL THEY GOT A DEAL. THEY MAY NOT HAVE MADE US VERY PROUD IN THE PROCESS BUT THE MARKET SEEMS TO LIKE IT AT LEAST FOR TODAY. COOPERMAN: I DON'T THINK IT'S A SURPRISE. THE ONLY SURPRISE IS HOW AGGRAVATING IT IS TO GET THERE, AND HOW THEY DESTABILIZED THE PUBLIC UNNECESSARILY, BUT BE THAT AS IT MAY, THAT'S POLITICS. WE SEEM TO HAVE LEADERSHIP OUT OF CRISIS AND NO CRISIS, NO LEADERSHIP. WAPNER: WHAT DOES IT MEAN THEN FOR 2013 NOW IN THE MARKETS? THE DEAL IS IN THE BOOKS. WE'RE GOING TO HAVE A BIG FIGHT ABOUT THE DEBT CEILING COMING UP, YOU KNOW THAT. PUT IT ALL INTO CONTEXT ABOUT WHAT PEOPLE SHOULD BE THINKING ABOUT THE STOCK MARKET NOW AS WE HEAD INTO 2013? WAPNER: THEN WHY ONLY M0DESTLY OPTIMISTIC ON STOCKS FOR 2013? I KNOW YOU'RE SPREADING THE WEALTH FIGURATIVELY AND LITERALLY TO YOUR TEAM. BUT 32% GROSS, 25.5% NET YOU HAVE THE U.S. ECONOMY SEEMINGLY IMPROVING, HOUSING GETTING BETTER, CHINA SEEMS TO BE IMPROVING AS WELL, YOU'VE GOT EUROPE NOT AS BAD AS CERTAINLY IT WAS, AND THE ECB, CENTRAL BANKS ALL AROUND THE WORLD ARE GREASING THE MARKETS WITH MORE LIQUIDITY THAN EVER BEFORE. COOPERMAN: YOU HAVE MY POSITIVE LIST. IT'S FUNNY, YOU DON'T HAVE MY NOTES BUT BASICALLY MY COMMENT ABOUT THE ECONOMY, MY COMMENT ABOUT THE FED, THE GLOBAL ECONOMY IS DOING SLIGHTLY BETTER, THE CHINESE ECONOMY IS PICKING UP, HOME PRICES ARE IMPROVING, HOME SALES ARE PICKING UP, THAT'S IMPORTANT TO CONSUMER PSYCHOLOGY, THE BANKING SYSTEM IS HIGHLY LIQUID, GASOLINE PRICES FROM $3.85 TO $3.30 AND IMPORTANTLY YOU DIDN'T MENTION THIS BUT INVESTORS HAVE DE-RISKED. THEY'VE BEEN SPENDING THE LAST FOUR OR FIVE YEARS BUYING BONDS AND SELLING STOCKS, SO MY GUESS IS THEY MIGHT SPEND SOME PART OF THE NEXT FEW YEARS REPLACING THE STOCKS THEY HAVE SOLD. SO I AGREE WITH ALL THAT. FIRST OF ALL I DIDN'T GIVE YOU A NUMBER. LAST YEAR I THINK THE TOTAL RETURN ON THE S&P WAS AROUND 16%. WAPNER: RIGHT. COOPERMAN: ABOUT 13 PLUS AND HALF A PERCENT IN PRICE AND THE REST IN DIVIDENDS. WE'RE LOOKING FOR 10% INCLINE A YEAR AND THAT WOULD MAKE ONE CONSTRUCTIVE. ONE OF MY ISSUES, NUMBER ONE, I HAVE TO SAY WE ARE NOT, YOU KNOW, FOLLOWING POLICIES THAT ARE SUSTAINABLE. TRILLION-DOLLAR DEFICITS AND ZERO INTEREST RATES WHICH ARE DESTROYING SAVERS IS NOT A POLICY FOR LONG-TERM SUCCESS, AND SO WE HAVE TO EXIT FROM THESE POLICIES AND EXITING FROM THE POLICIES IS NOT GOING TO BE EASY, NUMBER ONE. NUMBER TWO, PROFIT MARGINS PROBABLY ARE IN A ZONE OF PEAKING AND THERE'S AS MUCH CHANCE OF EARNINGS BEING DISAPPOINTING IN CERTAIN SECTORS OF THE ECONOMY THAN BEING PLEASING. I THINK THE EARNINGS MOMENTUM IS NOT WHAT IT WAS AND WE HAD THIS WASHINGTON DISARRAY AND THE DEBT CEILING NEGOTIATIONS COMING UP, THAT'S GOING TO BE PAINFUL. I READ SOME EXPLETIVES MR. BOEHNER DIRECTED TOWARDS HARRY REID SO THERE'S CLEARLY SOME ENMITY THERE, SO THERE ARE A LOT OF THINGS TO WORRY ABOUT BUT THE OVERALL MARKET SHOULD DO BETTER AND I'M MOST FOCUSED IN ON THE FACT, WHAT DO YOU DO WITH MONEY? I'M LIKE YOUR VIEWERS I HAVE TO TAKE MONEY AND INVEST IT. WAPNER: YOU HAVE TO PUT IT SOMEWHERE. COOPERMAN: MY LINE IS ON BONDS, WHICH IS WHERE THE PUBLIC'S BEEN PUTTING MONEY, I THINK BUYING U.S. GOVERNMENT BONDS IS LIKE WALKING IN FRONT OF A STEAMROLLER TO PICK UP A DIME. WAPNER: LET'S PUT IT INTO EQUITIES THEN. WHERE ARE THE WINNING STRATEGIES? COOPERMAN: I'LL GIVE YOU TWO ANSWERS. ONE I'LL GIVE A SLIGHT PLUG YOU GUYS HAD ON THE PROGRAM A WHILE AGO AN ORGANIZATION CALLED PORTFOLIOS WITH PURPOSE, IS A CONTEST THEY CREATED WHERE YOU PAY A FEE TO ENTER, AND YOU HAVE THE RIGHT TO NAME A FAVORITE CHARITY TO RECEIVE THE WINNINGS IF YOU WIN. SO YOU HAD TO PICK FIVE STOCKS AND SO I'LL GIVE YOU FOUR OF THE FIVE I PICKED, BECAUSE ONE IS THIN AND WE'RE IN THE PROCESS OF BUYING IT AND MY FIDELITY IS TO MY INVESTMENTS FIRST SO CROC, CHIMERA, QUALITY CORP. WHICH IS A BRAZILIAN-BASED HEALTH CARE COMPANY, TETRAGON WHICH IS A FINANCIAL SERVICES COMPANY MANAGES CO EQUITY AND THE LAST ONE IS A MYSTERY STOCK, WHEN IT DOUBLES THIS YEAR, THEN WE'LL GIVE YOU THE NAME, BUT YOU HAVE TO FORGIVE ME, I'M NOT BEING COY. THE OTHER ANSWER IS EVERY CHRISTMASTIME I TAKE OUT MY TEAM, WHICH FOR THE HOLIDAY DINNER AND ONE OF THE PREREQUISITES IS TO GO AROUND THE ROOM AND ASK EVERYBODY TO PICK TO CLICK THE FOLLOWING YEAR SO JUST TO GIVE YOU SOME SEMBLANCE OF THE IDEAS, OUR TECHNOLOGY PARTNER LIKES QUALCOMM, GOOGLE AND VERIFONE, WE OWN ALL THREE. ASSUME ANYTHING I MENTION WE OWN. THE GUY WITH THE HOTTEST HAND IN 2012, WE MADE A LOT OF MONEY FOR SPRINT, THINK SPRINT WILL BE A WINNER IN 2013, WE ARE THERE. WE'RE NOT YET DECLARING HOW WE'RE VOTING BUT WE OWN A LOT OF SANDRIDGE AND WE'RE LISTENING TO BOTH SIDES CAREFULLY. WE LIKE SOME OF THE ENERGY COMPANIES, HALIBURTON, ATLAS ENERGY AND ATLAS PIPELINE AND IN THE HEALTH CARE AREA EXPRESS SCRIPPS MERCK AND MOTOROLA SOLUTIONS AND IN THE FINANCIAL SERVICES ONE OF OUR LARGEST POSITIONS AIG, WE HAVE A LOT OF COMPANY BUT WE THINK IT'S CHEAP RELATIVE TO BOOK VALUE AND CHARTIS IS AN IMPROVING EARNINGS TREND SO WE'RE LOOKING AT A LOW MULTIPLE ON NORMALIZED EARNINGS. WE HAVE A FEW OF THE BANKS, CITI CORPS, JPMORGAN, WELLS FARGO, TETRAGON AND CROCS AND CONSUMER. THERE'S NO SHORTAGE OF STOCKS. ONE THAT'S DECLINED RECENTLY BECAUSE THE MARKET DIDN'T LIKE A DEAL WE HAPPENED TO LIKE BUT WE BOUGHT A LOT OF FREEPORT COPPER AND GOLD ON THIS RECENT BREAK WHEN THEY ANNOUNCED THE 2A ACQUISITION OF TWO ENERGY COMPANIES WE HAVE A HIGH REGARD FOR MR. MOFFITT, WE THINK HE'S AN OBJECTIVE CLEAR-HEADED THINKING GUY AND WE LIKE THE COMBINATION AND WE'RE EXPRESSING THAT THROUGH A LARGE POSITION IN MMR, WHICH THAT GAME IS LARGELY OVER BUT WE ROTATED INTO FREEPORT COPPER AND GOLD. NO SHORTAGE OF ATTRACTIVE IDEAS BUT THERE ARE ISSUES OUT THERE. AS A CITIZEN, I'M MOST CONCERNED ABOUT THE UNSUSTAINABLE NATURE OF THE POLICIES WE'RE FOLLOWING. THE PROVERBIAL STUFF HAS GOT TO HIT THE WALL ONE OF THESE DAYS OR THE FAN. YOU DON'T KNOW WHETHER IT'S 2013, 2014 OR 2015, AND IN MY BUSINESS IF YOU'RE TOO EARLY YOU DON'T HAVE A BUSINESS AND IF YOU'RE TOO LATE, YOU DON'T HAVE A BUSINESS. AS AN ELEMENT OF TIMING, FOR THE MOMENT, GIVEN ALL THE THINGS YOU MENTIONED, THE ECONOMY DOING BETTER, THE CHINESE ECONOMY PICKING UP HOME PRICES, ET CETERA, THAT I THINK THE MARKET SHOULD PRODUCE A RESPECTABLE RETURN IN 2013. DON'T DISREGARD VOLATILITY. HOPEFULLY THE CIRCUS AROUND THE DEBT CEILING WON'T BE AS BAD AS THE FISCAL CLIFF. WAPNER: LET'S HOPE. I THINK OUR VIEWERS WILL BE THRILLED OF THE NUMBER OF NAMES THAT YOU WENT THROUGH RIGHT THERE, AND ON THE OTHER SIDE OF THE BREAK, MR. COOPERMAN I'D ASK TO YOU STICK WITH US, I WANT TO TALK TO YOU MORE ABOUT TECHNOLOGY, APPLE SPECIFICALLY. OBVIOUSLY HAD A TURBULENT END TO 2012, SO WE'LL GO THERE AND TALK ABOUT A FEW OTHER THINGS. IN THE MEANTIME WE'LL TAKE A QUICK BREAK. WAPNER: WELCOME BACK TO "THE HALFTIME REPORT. "LET'S WELCOME BACK IN LEON COOPERMAN, CHAIRMAN OF OMEGA ADVISORS. MR. COOPERMAN, I THOUGHT INTERESTING DURING THE BREAK WHEN WE WERE SPEAKING YOU SAID YOU WERE SURPRISED AT THE RALLY SOMEWHAT THAT WE'RE SEEING TODAY. COOPERMAN: WELL, NOT THE RALLY ITSELF BUT THE ORDER OF MAGNITUDE. I HAD THOUGHT THAT ON FRIDAY THE MARKET HAD DONE A LARGE PART OF THE ADJUSTMENT TO THE HIGH LIKELIHOOD THAT THE FISCAL CLIFF WOULD BE DEALT WITH, SO TO BE UP ANOTHER 2 PERCENT IS A PLEASANT SURPRISE. I'LL TAKE IT, BUT I THINK IT REVOLVES AROUND THE FACT THAT PEOPLE ARE UNDERINVESTED. AS I SAID, ONE OF THE FACTORS IN THAT PLUS LIST THAT YOU AND I REVIEWED IS THAT INVESTORS HAVE DE-RISKED WITH THE SCARE AND THE DAMAGE FROM THE 2008 EXPERIENCE IS VERY SCARRING. AND SO IN '09, '10, '11, '12, EVEN THOUGH THE MARKET WAS MOVING UP, THE PUBLIC WAS SELLING THEIR STOCKS AND BUYING BONDS AND FRANKLY THAT WAS BEING DONE BY INSTITUTIONS WHICH REALLY SURPRISED ME. I'VE HAD SOME WITHDRAWALS IN THE LAST YEAR FROM PENSION PLANS THAT WERE TAKING THE MONEY OUT. I ASKED THEM WHAT THEY'RE DOING WITH THE MONEY, THEY ARE BUYING FIXED INCOME WHICH I THINK IS CRAZY RELATIVE TO EQUITIES. THE MARKET ALWAYS DOES WHAT IT HAS TO DO TO EMBARRASS THE LARGEST GROUP OF INVESTORS AND MY GUESS IS THE PAIN TRADE HAS BEEN UP OVER THE LAST YEAR AND WILL CONTINUE FOR A WHILE TO BE UP UNTIL PEOPLE GET TOTALLY COMMITTED AND THEY WON'T HAVE TO WORRY ABOUT THE OTHER SIDE OF THE EQUATION. WAPNER: YOU THINK WE'RE GOING TO SEE THE RETURN OF THE INDIVIDUAL INVESTOR EN MASSE IN 2013 OR ARE THOSE SCARS JUST STILL TOO DEEP? COOPERMAN: NO, I WOULDN'T EXPECT IT IN 2013. I TELL A STORY, PEOPLE ARE PROBABLY SICK OF HEARING THE STORY BUT OF MY OWN PERSONAL ODYSSEY. I GOT MY MBA FROM COLUMBIA BUSINESS SCHOOL ON JANUARY 31ST OF 1967. I HAD A 6-MONTH-OLD CHILD AT THE TIME, WHO IS NOW A 47-YEAR-OLD HEDGE FUND MANAGER WITH A GREAT RECORD. I HAD A NATIONAL DEFENSE EDUCATION EX-STUDENT LOAN, I HAD NO MONEY IN THE BANK, SO BY DEFINITION I HAD A NEGATIVE NET WORTH SO I COULDN'T AFFORD THE OBLIGATORY VACATION. I THINK BACK THEN THEY WERE GOING TO HAWAII, NOW I THINK THEY GO TO AUSTRALIA. AND SO I HAD TO GO TO WORK IMMEDIATELY AND TO THE NEXT DAY I STARTED MY CLOSE TO 25-YEAR LOVE AFFAIR WITH GOLDMAN SACHS. I STARTED MY CAREER ON FEBRUARY 1ST OF '67 AND THE DOW ON FEBRUARY 1ST OF '67, WAS ROUGHLY 850, AND LO AND BEHOLD, 15 YEARS LATER IT WAS 850. I MADE MY MONEY DURING THAT 15-YEAR PERIOD BY FINDING THINGS THAT WERE MISPRICED AND SELLING AT 600 EQUIVALENT TO THE DOW OR 700. I WOULDN'T BE SURPRISED IF WE REMAINED IN SOME KIND OF TRADING RANGE ENVIRONMENT FOR ALL INTENTS AND PURPOSES FOR ANOTHER COUPLE OF YEARS UNTIL THE GLOBAL ECONOMY DELEVERED AND WE SET A BASE ON MORE SUSTAINABLE ECONOMIC GROWTH. YOU KNOW, WE CAN AS I SAID BEFORE I DON'T WANT TO KEEP REPEATING THE SAME THEME, TRILLION-DOLLAR PLUS DEFICITS YEAR IN AND YEAR OUT IN ZERO INTEREST RATES ARE NOT A SUSTAINABLE POLICY AND ALL OF US THAT LOVE OUR COUNTRY WANT TO SEE US GET ON THE RIGHT PATH. I HAD NO PROBLEM HOW WE DEALT WITH THE FISCAL CLIFF. I THINK THE TAX RATES ON THE WEALTHY OUGHT TO HAVE GONE UP AND DID GO UP. BUT WE'RE DOING NOTHING ON THE EXPENDITURE SIDE. YOU CAN TAKE ALL THE MONEY THE WEALTHY PEOPLE HAVE AND STILL NOT DEAL WITH OUR FISCAL PROBLEM. WE NEED ENTITLEMENT REFORM, WE NEED TO BASICALLY REDUCE GOVERNMENT EXPENDITURES. MAYBE WE HAVE TO RESORT TO A VAT TAX BECAUSE THERE'S NOT ENOUGH MONEY IN THE HANDS OF WEALTHY PEOPLE TO DEAL WITH THE PROBLEMS WE HAVE. LIKE I SAID, IN THE WORLD WE ARE IN WE HAVE TO MAKE DISTINGUISHING JUDGMENTS. I'D RATHER TAKE MY CHANCE IN EQUITY THAN I WOULD IN A FIXED INCOME INSTRUMENT AT THE PRESENT TIME. WAPNER: LET ME TURN TO A JUDGMENT THAT YOU RECENTLY MADE ON APPLE, THE MOST VALUABLE COMPANY IN THE WORLD, A STOCK THAT'S PROBABLY THE MOST WIDELY OWNED STOCK IN THE WORLD AS WELL. YOU SOLD DOWN THE POSITION IN APPLE AND YOU SAY YOU PREFER QUALCOMM TO APPLE AT THIS POINT. FIRST OFF, WHY DID YOU LOSE SOME FAITH IN APPLE? COOPERMAN: I DIDN'T LOSE FAITH. YOU KNOW, FRANKLY, WE ARE FUNDAMENTAL IN OUR NATURE, BUT WE PAY ATTENTION TO THE MARKET AND WE DIDN'T LIKE THE WAY IT WAS ACTING, TO BE HONEST WITH YOU, IT WAS ONE OF THE FACTORS. HAVE NOT BEEN KEEN ON THEIR FINANCIAL POLICIES. I DON'T THINK A COMPANY HAS TO SPEND 130 BILLION DOLLARS IN CASH, SO I THINK THEIR FINANCIAL POLICIES ARE SOMEWHAT DESTRUCTIVE TO VALUATION, TO SIT ON ALL THIS CASH EARNING NOTHING, I MEAN CISCO ACCELERATED DIVIDEND, COSTCO I THINK BORROWED A FEW BILLION DOLLARS TO PAY DIVIDEND TO BEAT THE TAX INCREASES. WE DIDN'T SEE ANYTHING LIKE THAT OF APPLE. BUT, I THINK IT IS AN ISSUE OF WHETHER THEY ARE EXCESSIVELY PROFITABLE, NOW THEY ARE GETTING A PREMIUM FOR THEIR PHONE FROM THE CARRIERS. SAMSUNG HAS A GOOD PRODUCT AND THAT PREMIUM COULD START TO DIMINISH. I THINK ALSO, THERE'S PROBABLY NOTHING OUT THERE THAT COULD REPLACE THE iPHONE, AND MOST PEOPLE HAVE THE SAME FORM FACTOR NOW, SO THE UNIQUENESS AND THE SPECIALNESS OF IT IS PROBABLY SOMEWHAT DIMINISHED, BUT IT'S A COMBINATION OF FUNDAMENTAL AND TECHNICAL FACTORS. YOU KNOW, QUALCOMM IS MORE UBIQUITOUS, IT'S A – THEY BENEFIT FROM THE GROWTH OF SMARTPHONES THROUGH ANY NUMBER OF MANUFACTURERS, NOT JUST APPLE DEPENDENT. BUT APPLE IS A FINE COMPANY, 11 TIMES EARNINGS WE STILL OWN IT, WE ARE JUST NOT AS BIG AS WE WERE BEFORE. WAPNER: RIGHT. MR. COOPERMAN GREAT TO TALK TO YOU AS ALWAYS. I CAN'T THANK YOU ENOUGH FOR TAKING TIME OUT OF WHAT I KNOW IS YOUR BUSY DAY TODAY TO SPEAK WITH US. COOPERMAN: CALL ME LEE AND ALL THE BEST TO YOU FOR A HAPPY, HEALTHY AND SUCCESSFUL NEW YEAR. WAPNER: LIKEWISE, THANKS SO MUCH. LEON COOPERMAN OMEGA ADVISORS. |
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