"This Will End In Tears": Cooperman Disses Robinhood Traders, Says Equity Valuations "Don't Make Any Sense"

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by Tyler Durden
Monday, Jun 15, 2020 - 02:50 PM

Leon Cooperman has committed virtually every transgression on CNBC's list of TV 'don'ts': He has criticized both Tesla and the SEC, he's cussed live on air, and most importantly, he's unafraid to mix in snippets of political commentary with his market analysis.

Yet, he was invited on air once again for a brief but memorably interview during "the Halftime Report" on Monday with Scott "the Judge" Wapner, where the hedge fund legend tried to talk some sense into viewers and analysts who have taken a more accommodating view on the army of retail day traders and their multimillionaire leader.

As millions of Robinhood buyers line up to buy shares of "non-going concern" Hertz - a company Cooperman mentioned by name - at a time when the car rental business across the world is virtually dead, Cooperman told Wapner what we've long suspected: "This will end in tears".

Of course, Cooperman was referring specifically to the rebounds in airline stocks and others, which have soared since Warren Buffett announced that he had finally given up on his ownership stake, prompting "world's greatest day trader" David Portnoy, founder of DDTG, to label Buffett a washed-up goon.

"They are just doing stupid things, and in my opinion, this will end in tears, Cooperman said, referring to a flood of new retail investors into brokers especially the millennial-favored Robinhood.

To support his position, Cooperman cited the airlines' balance sheets, newly burdened by additional debt that they took on to survive the crisis.

"The notion that American Airlines has an enterprise value today higher than pre-Covid because of the debt they’ve issued...doesn’t make any sense," Cooperman added.

Adding another element of controversy to his remarks, Cooperman insisted that shutting down the economy to combat COVID-19 was "a colossal mistake."

As he rambled on, the longtime hedge fund investor started to reminisce about his childhood in the Bronx, and his early days in finance where he made money by "buying low and selling high", not day-trading stocks with a P/E ratio of 33x+.

Moving on, Cooperman declared that the present market environment is certainly "abnormal'", not only because of the absurd valuations in the equity market, but also because of the interest-rate manipulation that has driven yields on $12 trillion of investment grade sovereign debt into negative territory,

The idea that there are $12 trillion of sovereign bonds that carry a negative interest rate - that is, virtually 'riskless' lending like a 10-year loan to the German or Japanese government - is "all you need to know" to prove that the global economy has entered an "abnormal" state.

Wapner sounded annoyed, and cut Cooperman off by declaring that the network had "important breaking news" to get to, prompting Cooperman to quip that "CNN has breaking news every 5 minutes on news that's four days old."

Cooperman remains a controversial presence on the network...

...while it seems like his Monday comments resonated to a greater degree than usual, largely thanks to his comments about CNN, many bulls hoping for endless federal largess to save the market were clearly angered.

Still, many bashed the elderly financier for pouring cold water on their daytrading dreams. But a word of caution as markets rally to their HoDs seemingly in spite of Cooperman: sometimes, daytrading can end not just in tears, but in tragedy.