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Leon Cooperman on GameStop Reddit speculators: ‘I am not damning them’ however it would ‘finish in tears’


Leon Cooperman instructed CNBC on Thursday he believes the Reddit-fueled buying and selling frenzy involving GameStop shares will finish poorly. Nevertheless, the billionaire investor stated he wasn’t faulting the individuals who kicked off the epic brief squeeze, which despatched the inventory to dizzying heights in current days.

“I am not damning them. I am simply saying from my expertise, this may finish in tears,” Cooperman stated on “Fast Money: Halftime Report,” as shares of the beleaguered online game retailer tumbled about 25%. Earlier within the session, GameStop’s inventory touched an all-time excessive of $483 however came under pressure as numerous retail brokerages placed limits on trades.

“GameStop shouldn’t be value $500, not value $400, not value $300, not value $200, not even value $100, not even value $50,” stated Cooperman, chairman of the Omega Household Workplace. He added that “traders” do not personal GameStop — solely “speculators” do.

Cooperman stated he believes the present second within the inventory market — together with the net hype pumping up closely shorted shares — is a results of many elements, together with the near-zero rates of interest instituted by the Federal Reserve in response to the coronavirus pandemic. He additionally stated the fiscal response from Congress is taking part in a job. 

“It is all interconnected,” stated Cooperman, the son of a Bronx plumber who later grew to become one in every of Wall Road’s most profitable traders. “The explanation the market is doing what it is doing is, individuals are sitting at house, getting their checks from the federal government, principally buying and selling for no commissions and no rates of interest. I am not saying they’re silly. Present me a man with a great report constantly, and I will present you a sensible man.”

Simply final week, Cooperman had warned about “euphoria” in parts of the stock market. GameStop shares had been buying and selling beneath $50 on the day of Cooperman’s remarks.

“I have been by way of cycles like this prior to now. That is excessive, extra so, however this too shall go,” the hedge fund pioneer stated Thursday. “On the finish of the day, the inventory market displays financial progress or the shortage thereof.” He added, “Water seeks its personal stage.”