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Cooperman Bets 15% on Energy, Oil Eyes $80-$90 Amid Tensions

Cooperman allocates 15% of family office assets to energy stocks amid oil's rise to over $80 a barrel due to Middle East tensions.

By Bill Bullington

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4/23, 11:28 EDT
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Key Takeaway

  • Leon Cooperman has allocated roughly 15% of his family office assets to energy stocks, betting on sustained high oil prices due to Middle East tensions.
  • With oil prices above $80 a barrel and potentially staying in the $80-$90 range, Cooperman views energy stocks as undervalued and lucrative dividend payers.
  • Despite recent dips in energy prices following diplomatic signals from Iran and Israel, the sector remains up more than 14% this year.

Cooperman's Energy Bet

Billionaire investor Leon Cooperman has disclosed a significant investment in energy stocks, attributing his decision to the recent surge in oil prices amid Middle East tensions. Cooperman, the chair and CEO of the Omega Family Office, revealed that approximately 15% of his family office assets are allocated to the energy sector. This investment comes at a time when West Texas Intermediate crude oil contracts for June have seen a notable increase, trading above $80 a barrel, marking a 13% rise in 2024.

Oil Price Dynamics

The escalation of conflict in the Middle East has been a key driver behind the spike in oil prices. Cooperman expressed his belief that oil prices are likely to remain within the $80 to $90 range. He emphasized the profitability of energy companies within this price bracket, noting their capacity to generate substantial dividends. "I think, given what’s going on in the Middle East, that the oil will probably stay in this $80 to $90 range. If it does, these guys are making lots of money and paying out big dividends," Cooperman commented during his appearance on CNBC’s “Squawk Box.”

Historical Context and Market Reaction

Cooperman has a history of investing in energy stocks, particularly during periods of price volatility. In 2021, he highlighted the energy sector as his largest position following a spike in natural gas prices caused by extreme weather conditions and reduced production. The S&P 500 energy sector saw a significant gain of more than 47% that year, and it has already increased by over 14% this year. However, recent developments have seen energy prices retract slightly from their peaks after Iran and Israel indicated a lack of interest in escalating their conflict further. Additionally, the market has largely ignored recent legislation from the House of Representatives aimed at broadening sanctions on Iran’s oil exports, a measure the Senate could consider in the near future.

Street Views

  • Leon Cooperman, Omega Family Office (Bullish on energy stocks):

    "I think, given what’s going on in the Middle East, that the oil will probably stay in this $80 to $90 range. If it does, these guys are making lots of money and paying out big dividends... I think the stocks are cheap." "I would say that I have found over 50 or 60 years of doing this, if I buy something at three times cash flow yielding 5% or 6%, I get lucky."