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- Warren Buffett’s lack of stock purchases during the market meltdown is a red flag for Leon Cooperman, the hedge-fund billionaire said in an email obtained by Business Insider.
- “If the greatest investor in my generation can’t figure it out, who am I to be bold?” Cooperman said.
- Buffett’s Berkshire Hathaway made only $1.8 billion in net stock purchases in the first quarter and netted $6.1 billion from stock sales in April.
- Cooperman shared several concerns about the coronavirus pandemic’s long-term effects and argued that the S&P 500 was about 10% overvalued.
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Warren Buffett and Charlie Munger’s dearth of stock purchases during the coronavirus sell-off is a red flag for investors, the hedge-fund billionaire Leon Cooperman said in an email obtained by Business Insider.
“I’m a watcher of Buffett and Munger for good reason,” he said. “Uncharacteristically, Buffett sold airlines into weakness and he doesn’t seem to be too active despite his liquidity.
“If the greatest investor in my generation can’t figure it out, who am I to be bold?” Cooperman added.
Buffett’s Berkshire Hathaway conglomerate made only $1.8 billion in net stock purchases in the first quarter and reported about $6.1 billion in net stock sales in April as it dumped its stakes in the “big four” airlines.
Munger, Berkshire’s vice chairman, struck a cautious tone in a Wall Street Journal interview last month. “We just want to get through the typhoon,” he said, “and we’d rather come out of it with a whole lot of liquidity.”
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Cooperman outlined several other reasons he was concerned about the pandemic’s long-term effects on the US economy and fearful that markets had gotten ahead of themselves.
They included greater compliance costs for companies to keep their workers safe, the decline in corporate profit margins from historic highs in January, and a sluggish recovery in demand if people need to prove they’re immune or have been vaccinated to attend sporting events, concerts, and other gatherings.
Cooperman pegged the S&P 500’s fair value at 2,550, suggesting the benchmark stock index was more than 10% overvalued as of Wednesday’s close.
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