Billionaire hedge fund founder Leon Cooperman just called private equity a ‘scam’

Leon Cooperman

Omega Advisors founder Leon Cooperman told attendees at an Alternative Investment Roundtable event in New York that now is not the time to invest in private equity.
Cooperman, who is transitioning his hedge fund into a family office, said there are several headwinds for private equity, including an expectation for increased interest rates when many PE firms would need to sell out of their investments.
That comes as some big hedge funds have been making more PE-like investments, and the two industries battle each other for talent.
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The latest shot fired in the battle between hedge funds and private equity comes from a billionaire stock-picker who represents the old guard of the hedge fund industry.

Omega Advisors founder and billionaire Leon Cooperman told attendees at an event in midtown Manhattan he thinks private equity as it currently operates is a “scam.”

“They’re getting very fancy fees for sitting on your money,” Cooperman said at the Penn Club. PE firms have been raising massive funds and have amassed hundreds of billions of dollars in so-called dry powder that has yet to be deployed into investments.

Hedge fund performance, meanwhile, has also been under scrutiny thanks to the high fees typical of the space. Last year, the average hedge fund lost money, and the market has outpaced the average fund in 2019, according to Hedge Fund Research.

And the line between private equity and hedge funds has been getting more blurred. Some of Cooperman’s hedge fund brethren have been increasingly creeping into the private equity space, with firms like Viking, Tiger Global, Point72, and more, investing in private markets and fighting PE firms for talent.

Large institutional investors — hedge funds’ biggest clients — have also been pumping money into private equity, which has raised close to $432 billion …read more

Source:: Business Insider


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