Leon Cooperman says his biggest position in the market is really contrarian

Published Thu, Sep 9 202110:00 AM EDTUpdated Thu, Sep 9 202110:20 AM EDT

Billionaire investor Leon Cooperman said Thursday the stock market is not susceptible to an imminent correction, and investors can still find plenty of bargains. "The cyclical conditions are not ripe for a big decline," he told CNBC's " Squawk Box ." "I'm finding a lot of things to do in the market which is encouraging. … By and large most companies are not overvalued." He said steep sell-offs are unlikely to occur coming out of a recession amid easy monetary policy and massive fiscal stimulus. To that effect, the chairman and CEO of the Omega Family Office has set his sights on a counterintuitive play in the market. Cooperman revealed that his largest position is energy. He pointed out his top picks in the sector. "My biggest position is a very contrarian view," said Cooperman. "I came into the year with overweight energy and even more overweight now. I look at the natural gas situation. Storage levels are way below historical norms, and the price of natural gas has moved up quite dramatically." Natural gas prices are at their highest levels since early 2014 due to extreme weather, increased exports and lower production. The energy sector is among the top-performing groups in 2021, up nearly 25% on the back of the economic reopening from the pandemic. Cooperman said he holds stocks of seven or eight companies in natural gas that are "coining money now, generating enormous amounts of free cash flow, paying down debt, paying out big dividends, buying back stock." He said his two favorites are Canadian companies Tourmaline Oil and Paramount Resources . He also highlighted Devon Energy, Energy Transfer and Pioneer Natural Resources. "We are going through a period now where supply and demand is tightening up for energy. You could be buying these companies at three or four times cash flow the stock repurchase debt repayments," Cooperman said. He said he's also finding value in Citigroup , Signature Bank and Pfizer as well as some of the Big Tech stocks — Google , Amazon , Microsoft and Facebook. Still, Cooperman remains cautious on the market longer term as he believes the unprecedented stimulus has pulled demand forward and created an artificial situation in the economy. "The market structure is broken, so when there's a fundamental reason for the market to go down, ... it will go down so quickly that the heads are going to spin. There are no stabilizing forces in the market now. It is all run by machines," Cooperman said. He added he's closely watching the Federal Reserve's speeches, inflation, gold, bitcoin, the dollar and interest rates overall for signals. Cooperman also said bonds are "totally overpriced." He said the benchmark Treasury yield historically trades in line with the nominal GDP, but it was trading around 1.34% on Thursday, significantly lagging the 6.5% expansion rate in the economy.

Leon Cooperman on CNBC's "Halftime Report."

Scott Mlyn | CNBC

Billionaire investor Leon Cooperman said Thursday the stock market is not susceptible to an imminent correction, and investors can still find plenty of bargains.

"The cyclical conditions are not ripe for a big decline," he told CNBC's "Squawk Box." "I'm finding a lot of things to do in the market which is encouraging. … By and large most companies are not overvalued."

He said steep sell-offs are unlikely to occur coming out of a recession amid easy monetary policy and massive fiscal stimulus.

To that effect, the chairman and CEO of the Omega Family Office has set his sights on a counterintuitive play in the market.