Chart o’ the Day: Omega Advisors vs the S&P 500

The term “Must-Read” gets thrown around a lot on the financial web (mostly by me and my friends, lol) but today’s chart comes from a truly must-read profile of Leon Cooperman by CNBC’s Lawrence Delavingne. Lee Cooperman is one of the greatest investors of all time, having established and led the asset management division at Goldman Sachs in the 1960’s before launching his own market-dominating hedge fund in 1991.

Cooperman’s hedge fund, Omega Advisors, has posted average annual returns of 14.6 percent net of fees versus the S&P 500’s 9.3 percent between January 1992 through June 2014. Almost no one else has been that good for that long. In the below chart, you’ll see that this outperformance certainly didn’t come for free – there were major drawdowns and setbacks almost every step along the way:

Screen Shot 2014-07-21 at 8.39.50 AM



A few things should jump out at you upon glancing at this graphic…

1. Omega’s secret seems to be betting big on recoveries after sell-offs. Cooperman clearly has a bullish bias and during the opening stages of market recoveries he tends to crush the indices and his fellow hedge fund peers who are typically more encumbered by short bets and hedges that drag. Take a look at that burst from the gates during the 1993, 2003 and 2009 recovery years. Markets made a comeback after recession in all three cases, but Lee’s portfolio absolutely smoked them to the upside.

2. Drawdowns have been unavoidable. This outperformance has come with a cost – Omega has not been immune to market downturns. The interest rate spike in 1994 caused major problems for some macro bets the firm had on, as did the Asian Contagion episode in 1998. In 2008, Omega’s drawdown during the Credit Crash was every bit as severe as the overall market’s – although Lee made it up to patient investors just a year later. I’m sure some doubters were quick to hit the escape hatch during each of those years. I’m even more sure they’re kicking themselves now for doing so.

3. There are only two up-years for the S&P 500 during this 20-year span in which the market had beaten Omega to the upside, as Cooperman’s bottoms-up analysis and stockpicking have been remarkable overall. That said, you just know that during each of those two “underperforming” years, there were investors grumbling about their fees not being justified. This is what I call the dumb smart money – otherwise intelligent people who ought to know better than to obsess over a year or a quarter of relative performance. But everyone is guilty of this kind of ridiculousness from time to time, myself included.

Anyway, the entire article should be in your queue, Lee is a living legend and Lawrence’s profile of him is loaded with interesting process and career nuggets for investors and pros alike.


Alpha Addict: The Amazing Career of Leon Cooperman (CNBC)

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here:

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Felix commented on Nov 24



  2. Barry Ritholtz interviews Leon Cooperman commented on Jul 07

    […] work ethic and dedication to being a top investor are the stuff of Wall Street legend. Last summer I looked at the long-term track record of his fund, Omega Advisors, and I was truly astounded at what the man has been able to accomplish […]

  3. immediate edge reviews commented on Sep 22

    … [Trackback]

    […] Find More here on that Topic: […]

  4. http// commented on Nov 14

    … [Trackback]

    […] Find More Information here to that Topic: […]

  5. best malaysia online casino commented on Nov 20

    … [Trackback]

    […] Read More on that Topic: […]

  6. DevOps Consulting Company commented on Nov 23

    … [Trackback]

    […] Read More here to that Topic: […]

  7. fake rolex commented on Dec 29

    … [Trackback]

    […] There you can find 88342 more Info on that Topic: […]

  8. buy Dexedrine online commented on Jan 13

    … [Trackback]

    […] Here you can find 90692 more Info on that Topic: […]

  9. Automated Regression Testing Services commented on Jan 16

    … [Trackback]

    […] Find More on that Topic: […]

  10. Rose Slots commented on Jan 22

    … [Trackback]

    […] Read More Information here on that Topic: […]