Omega Advisors, Inc. October 18, 2011 PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS, AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A POOL OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING MEMORANDUM. CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS POOL. The Investment Outlook and Some Attractive Values Leon G. Cooperman Chairman and CEO Omega Advisors, Inc. Investment Manager : Omega Advisors, Inc. Wall Street Plaza 88 Pine Street, 31st Floor New York, NY 10005 (212) 495-5200 Presentation by Omega Advisors, Inc.
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Omega Advisors, Inc.
October 18, 2011
PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH POOLS WHOSE PARTICIPANTS ARE LIMITED TO QUALIFIED ELIGIBLE PERSONS, AN OFFERING MEMORANDUM FOR THIS POOL IS NOT REQUIRED TO BE, AND HAS NOT
BEEN, FILED WITH THE COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A POOL OR UPON THE ADEQUACY OR ACCURACY OF AN OFFERING MEMORANDUM. CONSEQUENTLY, THE COMMODITY FUTURES
TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS OFFERING OR ANY OFFERING MEMORANDUM FOR THIS POOL.
The Investment Outlook and SomeAttractive Values
Leon G. Cooperman
Chairman and CEO
Omega Advisors, Inc.
Investment Manager:
Omega Advisors, Inc.Wall Street Plaza
88 Pine Street, 31st Floor
New York, NY 10005
(212) 495-5200
Presentation by
Omega Advisors, Inc.
Omega Advisors, Inc.
2010 2011 2012
Real GDP (qoq % saar) 3.4 1.9 2.2
Real Consumer Spending (qoq % saar) 3.0 1.7 2.0
Real Business Equipment & Software (qoq % saar) 16.6 8.0 7.5
Core PCE Inflation ( qoq % saar) 1.0 1.8 1.5
Unemployment Rate (avg %) 9.6 (a) 9.0 (a) 9.0 (a)
Federal Funds Target (%) 0.25 (a) 0.25 (a) 0.25 (a)
S&P 500 Operating Earnings (yoy %) 36.6 13.5 5.0
S&P 500 Operating EPS ($) 85.5 97.0 102.0
(a) Year-end actual/forecastssource: BEA, Bloomberg, Macroeconomic Advisors, and Omega Advisors, Inc.
Q4 to Q4
U. S. Economic Environment
Exhibit 1
Omega Advisors, Inc.
Exhibit 2
100806040200989694929088868482
14
13
12
11
10
14
12
10
8
6
4
2
0
Saving - Monthly Data from 12/80 to 8/11, Debt - Quarterly Data to 11:q2
Source: Federal Reserve Board, BEA, and Omega Advisors, Inc.
Household Debt Service Ratio and Saving Rate
1110090807060504030201009998
95
90
85
80
75
70
65
60
95
90
85
80
75
70
65
60
Quarterly Data from 97:q4 to 11:q2
Source: Federal Reserve Flow of Funds and Omega Advisors, Inc.
Household Liquid Assets % Liabilities
11100908070605040302010099989796959493929190
40
20
0
-20
-40
-60
-80
-100
40
20
0
-20
-40
-60
-80
-100
Quarterly Data from 90:q3 to 11:q3
Source: FRB Senior Loan Officers Opinion Survey and Omega Advisors, Inc.
Bank Lending Standards Easing
C&I
Consumer
Debt Service Payments as a % of Disposable Personal Income (left scale) Personal Saving Rate (right scale)
Households Liquid Assets as a % of Household Liabilities
Net % of Banks Easing Standards for C&I Loans, avg of Small, Medium & Large Bus.Net Percent of Banks Indicate More Willing to Make Consumer Loans
Omega Advisors, Inc.
Exhibit 3Why We are Not Likely to Experience Another 2008 Type Decline?
1. Banking system has gone from insolvency to strong capital ratios.
2. No weak/opaque shadow banking system to contend with.
3. The financial condition of Corporate America is excellent.
4. Profit and revenue growth are still good as is growth in dividends and share buybacks.
5. Business inventories are in excellent shape. There is no bubble in housing as in 2008 and
most cyclical sectors of the economy are at a very low percentage of GDP.
6. Household debt/GDP, while still high, has dropped from 95.4% to 85.1%. Debt service
ratio substantially improved.
7. The consumer savings rate has gone from 1% to 5.0%.
8. Lower dollar should be a plus for exports.
9. Oil price decline from $115 to $77 WTI ($130 to $102 Brent) per barrel positive for
consumers and economy generally.
10. FED policy of zero interest rates will ultimately work.
11. Tame wages and decent productivity.
12. Decent M&A activity and large pool of private equity capital.
13. Investors are conservatively postured.
14. Market valuation very appealing – both absolute and particularly relative to alternatives
(financial repression).
Omega Advisors, Inc.
Exhibit 4
Euro Zone Will Be Okay ?
We have been very disappointed in the tardiness and substance of policies offered by the euro-
zone governments and the ECB to address the European sovereign-debt issue. This tardiness
and lack of substance has taken its toll on risk assets. Nonetheless, we do believe that
governments and the central bank in Europe, for now, will address the sovereign-debt issue.
•EFSF permitted to buy weak peripheral debt in the primary and secondary markets
• EFSF permitted to extend loans to shore up bank balance sheets
• EFSF/IMF likely to fund Greece through mid-2014
• ECB purchasing Italian and Spanish debt
• ECB providing unlimited liquidity to banks
• ECB moderating its tight money policy
•ECB purchasing covered bonds from banks, aiding bank funding
• Asian governments likely to support euro-zone sovereign debt
• EFSF lending capacity lifted to 440 billion and likely to increase further
•Euro-zone bank re-capitalizations coming
•Increased dollar swap funding available to euro-zone banks
Note: EFSF – European Financial Stability Fund
Omega Advisors, Inc.
Exhibit 5
201120102009200820072006
160
140
120
100
80
60
40
20
160
140
120
100
80
60
40
20
Daily Data from January 2006 to 10/14/11
Source: Bloomberg and Omega Advisors, Inc.
Crude Oil Price
Crude Oil Price ion US $ - WTI Crude Oil Price in US $ - Brent
Omega Advisors, Inc.
Exhibit 6
Length of
% Change Peak to P/E Contraction
Peak to Trough Peak to
Date S&P 500 Date S&P 500 Trough (months) Trough
Jun 1948 17.06 Jun 1949 13.55 (20.6)% 12 (38.4)%
Dec 1952 26.59 Aug 1953 22.71 (14.6) 8 (18.3)
Jul 1956 49.74 Dec 1957 39.42 (20.7) 17 (15.3)
Jul 1959 60.62 Oct 1960 52.30 (13.7) 15 (10.3)
Dec 1961 72.64 Jun 1962 52.32 (28.0) 6 (33.8)
Jan 1966 94.06 Sep 1966 73.20 (22.2) 8 (26.7)
Nov 1968 108.37 Jun 1970 72.72 (32.9) 19 (31.2)
Dec 1972 119.12 Sep 1974 62.28 (47.7) 21 (63.2)
Dec 1976 107.46 Mar 1978 86.90 (19.1) 15 (26.6)
Nov 1980 140.52 Aug 1982 102.42 (27.1) 21 (24.7)
Aug 1987 336.77 Dec 1987 223.92 (33.5) 4 (41.2)
Jul 1990 368.95 Oct 1990 295.46 (19.9) 3 (20.1)
Jul 1998 1186.75 Aug 1998 957.28 (19.3) 1 (19.3)
Mar 2000 1527.46 Oct 2002 776.77 (49.1) 31 (14.9)
Oct 2007 1565.15 Mar 2009 676.53 (56.8) 17 (48.3)*
Average (28.3)% 13.2 (28.8)%
Apr 2011 1363.61 Current(a) 1099.23 (19.4) (21.8)
*Excluding financial sector write-downs
(a) As of October 3, 2011
Source: Standard & Poor's, UBS Investment Research, and Omega Advisors, Inc.
Peak Trough
Historical Bear Market Cycles
Omega Advisors, Inc.
Exhibit 7
Date of Date of Re ce ssion
Economic Economic Duration
Pe ak Trough (month) Date Months Afte r Re ce ssion Starte d Date Months Afte r Re ce ssion End
Nov 1948 Oct 1949 11 May 1949 6 Nov 1949 1 -3.3
Jul 1953 May 1954 10 Aug 1953 1 Nov 1953 -6 -1.6
Aug 1957 Apr 1958 8 Aug 1957 0 Aug 1958 4 -17.0
Apr 1960 Feb 1961 10 Aug 1959 -8 May 1961 3 -11.7
Dec 1969 Nov 1970 11 Aug 1969 -4 Nov 1970 0 -12.9
Nov 1973 Mar 1975 16 Aug 1974 9 Aug 1975 5 -14.8
Jan 1980 Jul 1980 6 Feb 1980 1 Aug 1980 1 -4.3
Jul 1981 Nov 1982 16 Nov 1981 4 Feb 1983 3 -19.1
Jul 1990 Mar 1991 8 May 1989 -14 Nov 1991 8 -14.9
Mar 2001 Nov 2001 8 Aug 2000 5 Feb 2002 3 -22.2
Dec 2007 Jun 2009 18 May 2007 -7 Aug 2009 2 -44.5
Ave rage (months) 11 -1 2 -15.1
Source: NBER, St andard & Poor's, and Omega Advisors, Inc.
The Economic and Profit Cycles
Pe ak to Trough
S&P 500 Profit Pe ak S&P 500 Profit Trough % Change in Profit
• Tame inflation owing to substantial output and labor excess capacity .
• Sub -par employment growth owing to regulation/slow growth in final demand.
• Slow profit g rowth owing to elevated profit margins and slow nominal GDP growth .
• Economic expansions average in duration and below average in magnitude.
• Changing composition of GDP with consumption declining as a percentage of output and capital spending, residential i nvestment, and exports increasing as a share of output.
1960 -2007 Next Decade
Real GDP 3.3% 2%-2.5%
GDP Price Deflator 3.7 2-2.5
Nominal GDP 7.2 4.0 -5.0
Profits 8.2 4-5 Dividend and Buyback Yield 3.4 3-4
SUN SUNOCO INC 35.33 0.75 47.1 2.75 12.8 1.7% 5.0%
(1) Cash Flow
Source: Omega Advisors, Inc.
Omega Advisors 10 Long Ideas
Omega Advisors, Inc.
NOTES TO INVESTMENT RESULTS
This material is provided for educational purposes only and should not be construed as investment advice or an offer to sell, or the solicitation of offer to buy
any securit y.
This material discusses general market activity, industry or sector trends, or other broad -based economic, market or political conditions and should not be
construed as investment advice. This information may not be current and Omega has no obligation to provide any updates or changes. We have relied u pon
and assumed without independent verification, the accuracy and completeness of all information from third party sources.
Any reference to a specific company does not constitute a recommendation to buy, sell or hold securities of such company.
Opinion s and views expressed herein are for informational purposes only and should not be construed as investment advice. They involve a number of
assumptions that may not prove to be valid so that actual results could differ significantly.
If any of the assump tions used in the example in this presentation do not prove true, results may vary significantly from the examples shown. These examples
are for illustrative purposes only and do not purport to show actual results.
Alternative Investment such as hedge f unds are subject to less regulation than other types of pooled investment vehicles such as mutual funds, may make
speculative investments, may be illiquid and can involve a significant use of leverage, making them substantially visible than other investmen ts.
No part of this material may, without Omega’s prior written consent, be (i) copied, photocopies or duplicated in any form, by any means, or (ii) distributed to
any person that is not an employee, officer, director or authorized agent of the recipien t.