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I’m investing here, avoiding this: Leon Cooperman

Oil closed up Tuesday, powering some energy stocks higher, but billionaire investor Leon Cooperman wouldn't necessarily use the rally to buy companies in the sector.

"What's going on in China, I would not want to be buying aggressively into oil. I would be looking elsewhere," the founder of hedge fund firm Omega Advisors said in an interview with CNBC's "Closing Bell" on Tuesday.

U.S. crude settled 1.24 percent higher at $47.98 a barrel, recovering from near six-month lows. Shares in Exxon Mobil, Chevron and British Petroleum—all hit hard by a nearly 50 percent dip in U.S. crude in the last year—rose on the day.

While China's sinking stock market and slowing economic growth have had a major impact on certain sectors like copper, steel and oil, Cooperman said overall he's less concerned about China than some.

"There's definitely a slowdown that's a negative but I don't think it's all that significant for the U.S. economy and market," he said.

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That said, he's not interested in investing in China.

"The government has shot themselves in the foot with their intervention in the market. We like more transparency, rule of law," said Cooperman.

"In fact, I'd like to say the government of the United States should get more out of our markets than they are in. That's one of the reasons why the economy in America is growing so slowly, is the success of regulation."

Cooperman also addressed Allergan's deal to sell its generics business to Teva Pharmaceutical for $40.5 billion. Shares of Allergan spiked on the news Monday, and closed 3.83 percent higher Tuesday.

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While Allergan is an "interesting company," Cooperman said he wouldn't make a big emphasis of it right now. In fact, he's recently decreased his position in the stock due to its large moves.

He believes Allergan is "trying to move higher up into the food chain so they'll probably go after a branded drug company."

Allergan is Omega's second-largest holding, behind First Data. Other top holdings include SunEdison, AerCap Holdings and Citigroup.

While not in the top 10, tech stocks like Google, Facebook and Priceline are also among the firm's holdings.

"These are high-growth companies selling at rational prices," said Cooperman.

He also pointed to some other high-yielding names he owns: Chimera Investment, Ellington Financial, PennyMac Financial Services and THL Credit.

"The public is scared of equities." Cooperman said. "It's another reason to be optimistic because I don't know of any market top where the public was redeeming out of equity funds and putting money in fixed income products. I think it's all a residual of 2008."

He believes the bull market is setting up to be the biggest in history.

—CNBC's Jacob Pramuk and Tom DiChristopher contributed to this report.

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