How Wall Street titan Leon Cooperman stays on top in investing and philanthropy

SATURDAY, MAY 18, 2013

Cues From Cooperman

By LAWRENCE C. STRAUSS | MORE ARTICLES BY AUTHOR

How Wall Street titan Leon Cooperman stays on top in investing and philanthropy.

Leon Cooperman has never been afraid to blow his stack. In fact, his volcanic tendencies are so well known on Wall Street that almost no one was fooled when the late Barton Biggs, Morgan Stanley’s longtime market strategist, introduced a character named Greg in Hedgehogging, a 2006 investment memoir. “Greg has a reputation of being difficult to work for and a screamer,” Biggs wrote, attempting to disguise Cooperman. “A screamer is a hedge-fund guy who yells at the people who work for him when they are wrong or careless.”

Asked about that description in a recent interview, Cooperman, 70, offered a warm, gentle smile. He is not a screamer, he said, but does take pride in being a “demanding” boss. Just look at it from his investors’ perspective, he said. “If you are paying somebody two and 20, as opposed to 1%, you basically have the right to expect more from that person,” he says. “And that’s what I tell my people: You’ve elected, for better or worse, to be in the two-and-20 game, so you have to be on the balls of your feet at all times.”Cooperman’s team has been listening up. His Omega Overseas Partners hedge fund has racked up average annual returns of 14.3%, after fees, since its inception in 1992, versus 8.6% for the Standard & Poor’s 500. Over the past three years, the returns have averaged 15.6%, making Omega No. 46 on Barron’s latest annual ranking of hedge-fund performance; see “Best 100 Hedge Funds.” Last year, it was up a striking 30%.

After nearly half a century on Wall Street, Cooperman is still sounding off and riding high. A decorated investment strategist at Goldman Sachs in the ’70s and ’80s, he is one of the great value investors of modern times. Yes, he took a drubbing in the financial crisis of 2008; Omega lost a full third of its value that year. But Cooperman never lost faith in stocks. He began scooping up fresh bargains “rather than fold up my tent, ride off into the sunset, and give people back their money.” In the end, he staged a classic comeback.

Omega, with $8.5 billion under management, is mostly taking long positions in stocks these days; short sales have been making up just 5% to 15% of the portfolio. The firm’s biggest bet: Sprint Nextel, an acquisition target of Dish Network and Japan’s SoftBank. For more on that and Cooperman’s outlook for the market, see the interview.

He has also been busy on other fronts. For one, there’s the scathing letter he penned to President Obama in 2011, accusing him of waging “class warfare.” The “divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them,” he wrote.

Cooperman is certainly among those “best positioned to help” — he has an estimated net worth of $2.5 billion. Last year, he earned an estimated $560 million and does lend a hand: He has agreed to the Giving Pledge, the initiative of Warren Buffett and Bill and Melinda Gates in which ultrarich families agree to give away more than half of their wealth. He already has given tens of millions to causes ranging from Judaism to inner cities to the Columbia Business School, his alma mater. “You are your brother’s keeper, and we have a moral imperative to help others less fortunate,” Cooperman likes to say.

His philanthropic vehicle is the $200 million — plus Leon and Toby Cooperman Family Foundation, set up with his wife; they and their two sons decide on which causes to fund. Charitable giving, he wrote to his family in a 2011 letter, “should be seen as an activity to help keep the family together over time.”

He has drawn up a clear plan for how the foundation will be run after he’s gone, with 50% of the annual giving set aside for organizations and causes Cooperman and his wife had supported. She and the sons and their wives, as trustees, will decide on the rest.

IT HAS BEEN A LONG JOURNEY. The son of a plumber, Cooperman grew up in the Bronx and was the first member of his family to get a college degree, in his case at Hunter College. An M.B.A. from Columbia opened the door to Goldman Sachs, which he joined as an analyst in early 1967 and where he rose quickly. He became co-head of research in 1972, chairman of the investment policy committee in 1974, and the partner in charge of research in 1976. In 1989, he started Goldman Sachs Asset Management. He wanted to launch a hedge fund, he says, but Goldman balked, worried he would end up short-selling the stocks of corporate clients. So he set out on his own.

Nowadays, Cooperman works in an office near Wall Street with 15 analysts and sweeping views of the East River. You can also find him, as Barron’s did, in the decidedly modest basement office of his New Jersey home, surrounded by a Bloomberg terminal, a treadmill, a stationary bike, and some free weights. Told that he’s looking lighter than a few years ago, Cooperman says, “I’ve lost 50 pounds, but I’ve got so much more to go.”

He may also be losing at least a little of that temper. “He’s mellowed a bit, but he’s still demanding,” says Michael Lewitt, a longtime friend who ran a fixed-income portfolio for Cooperman several years ago. “When you go in front of the firm’s investment committee, you’ve got to know your stuff. He wants you to be an expert on the company. He doesn’t like people who lack conviction in their ideas.”

For Cooperman’s investors, that’s all for the best.