Institutional Investor's Alpha Magazine - April 2009 - (Page 31) Interview Leon Cooperman LeonCooperman? Who’s Afraid of L A lifelong stock-picking savant minces few words when he questions corporations, threatens to sue other hedge fund managers and talks about the relative value of equities today. By Karl Cates eon Cooperman is sometimes a man on fire, spitting vitriol when he feels cross — or crossed — and insistent that hedge funds do what they promised when they signed up investors. He puts his money where his mouth is, refusing to erect redemption gates now, even though his $2.8 billion hedge fund firm, Omega Advisors, is well underwater and unlikely to start collecting its 20 percent performance fee again before 2011. Cooperman, who turns 66 this month, charges an antiquated 1 percent management fee (a pittance compared with the more lucrative 2 percent other managers typically impose). He could kick back, of course, and coast from here, having made several lifetimes’ worth of money already and garnered both fear and admiration for his old-school methodology, but he chooses not to. Cooperman is a workaholic, never fully satisfied, a hard-driven macroeconomic investor working at an obsessively microscopic level. “I start with a macro — big picture — and I work down,” he explains. “I enjoy getting involved with companies.” Whether companies enjoy getting involved with him is another matter. Instead of leaving it to underlings to pore over corporate earnings reports and crunch numbers, Cooperman does a lot of that work himself. He is an analyst’s analyst who sits in on quarterly earnings report conference calls and publicly picks apart executives when he sees a flaw in what they’re doing. A boneheaded move by a corporation in which his hedge fund owns stock can incite him to raise the roof, regardless of who’s listening. “I think this potential equity offering is about as dumb as anything I have ever seen,” he chastised Wyndham Worldwide executives during an analysts’ call last year. The cash-strapped hotel and resort company had been thinking of issuing new stock at what Cooperman thought was an absurdly low price. “We don’t have to sell equity at 20 percent of what it’s worth.” Wyndham promptly dropped the idea in a retreat that illustrates Cooperman’s clout. He is a classic value investor, seeking out companies whose stock is underpriced. One of his trademarks is his forcefulness in getting corporations to buy back their equity as a way of restoring value. On a conference call with DISH Network Corp. executives, for instance, he wondered why the satellite TV company wasn’t snapping up more of its own stock, especially after having bought back a big slug of shares at a much higher price some months earlier. “To buy 3 million [shares] at $27 and [then] to buy 82,000 at $9.99 isn’t too logical,” he said. Cooperman is not easily brushed off, as the CFO for APRIL 2009 • INSTITUTIONAL INVESTOR’S ALPHA • 31
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