Market too down on energy, too high on Tesla

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Leon Cooperman, CEO of Omega Advisors.

Adam Jeffery | CNBC

Billionaire investor Leon Cooperman told CNBC on Tuesday that investors have become too pessimistic on the energy sector and too optimistic on individual companies like Tesla.

“I would say we’re in the early stages of knocking on the door of euphoria, but we’re not quite [fully in] euphoria,” the founder of Omega Advisors said. “Certain parts of the market are in euphoria like Tesla. Other parts of the market, like energy, are in pessimism.”

“And so I’m trying to find things that make sense,” he said told CNBC’s Scott Wapner on the “Halftime Report.” Cooperman explained that some 15% of his money is currently in energy based on his belief that the sector is underappreciated versus darlings like Tesla.

“I think the market has gone overboard in their negative view of energy,” Cooperman said. “It’s like they can’t own enough Tesla and they can’t divest enough of their energy. The fact is if the economy grows, energy demand is going to grow.”

Cooperman’s comments on Tesla comes on the heels of a historic stock run for the electric car maker after better-than-expected financial results. The stock is up more than 280% over the last six months between an uptick in buying and a large-scale short squeeze in the equity.

The spike in Tesla shares came after the company reported fourth-quarter earnings of $2.14 per share, well ahead of expectations for $1.72 per share. It said it expected positive cash flow and net income on a continuing basis going forward barring one-time production investments, a relief to those who had poured cash into the young auto company in recent years.

Energy, meanwhile, has struggled over the last year between persistently low oil prices and high operating costs. The broad Energy Select Sector SPDR exchange-traded fund is down more than 18% over the last 12 months.

Crude prices have been under pressure of late thanks to concerns that the infectious coronavirus could reduce demand for gasoline, diesel and jet fuel in what’s viewed as an already-flush market.

The idea of weeks of canceled flights, closed national borders and locked-down cities has spooked financial markets around the world in recent weeks as investors anticipate the disease could interrupt consumer demand, and eventually, businesses’ ability to supply factories in select areas in China.

Cooperman also said investors should be more worried about the long-term ramifications of a Bernie Sanders presidency for the stock market than about the coronavirus.

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