Hedge Funds

Leon Cooperman on how to invest in a market being overrun by robot traders

Key Points
  • "The market we're in today, dominated by these machines: they like something at $10, they like it more at $11, like it more at $12," Cooperman said.
  • Cooperman argued that Facebook's recent stock decline amid the Cambridge Analytica scandal was a classic illustration of the misguided trading patterns.
  • "What it really means to me – and I'm telling my team this constantly – you must know your companies better than anybody else so you don't get shaken out," he added.
Leon Cooperman on CNBC's "Halftime Report."
Scott Mlyn | CNBC

Chairman and CEO of Omega Advisors Leon Cooperman believes robotic traders frequently botch fundamental moves in stock valuations.

"The market I grew up with: if you liked a stock at $10, you liked it more at $9 and even more at $8 and you had a to guard against occasionally being in those things that were really going down for very good reasons," Cooperman said on CNBC's "Halftime Report" Tuesday. "The market we're in today, dominated by these machines: they like something at $10, they like it more at $11, like it more at $12."

"So what it really means to me – and I'm telling my team this constantly – you must know your companies better than anybody else so you don't get shaken out, that you maintain your conviction."

Cooperman — renowned on Wall Street for his value investing and fundamental analysis — argued that Facebook's recent, but brief, stock decline amid the Cambridge Analytica scandal was a classic illustration of the misguided trading patterns.

The investor noted that he added to his position in Facebook while the shares slumped earlier this year and said he had an open order to buy more of the social media company's stock at the $180 per share level.

Omega Advisors, which the hedge fund manager founded in 1991, has approximately $3.4 billion in assets under management, according to its website.

"The thing that keeps me coming back to the game every day, for 50 plus years, is in November I owned 5 million shares of Time, Inc. It was actively trading at $10," he explained. "Nine days later, Meredith bought it for $18.50, cash."

"They tell me about efficiency: sure the large-cap stocks are reasonably, efficiently valued, but there are so many things in the market that are not efficiently valued."

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