Leon Cooperman Identifies the Greatest Threat to Tech Giants
Leon Cooperman on technology stocks
Billionaire investor Leon Cooperman recently shared his views on technology stocks in an interview with CNBC’s Halftime Report on February 7, 2018. According to Cooperman, the the US government presents the greatest risk to US technology companies.
He noted that the federal government “is just looking at them” and that “they want to see if they can pick their pockets.” The FANG stocks—Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Google (GOOGL)—have shown robust performances in the past few years.
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However, any change in policy that could affect their sales growth could strongly affect their performances. Recently, we saw that Apple (AAPL) showed a huge drop in performance primarily due to slower iPhone sales.
Cooperman identified another big threat to technology giants, noting, “This whole group trades like a group.” He added, “If one of them has a disappointment, they could all go down. That’s the way the market trades.”
Cooperman is positive about the technology sector but believes we could see a modest gain from this sector in 2018. He believes that technology stocks’ “valuations are very sound.”
Performance of technology sector
The Technology Select Sector SPDR ETF (XLK) fell 7.2% between February 1, 2018, and February 9, 2018. This ETF gained 34.6% in 2017, and the technology sector remained the top performer of the S&P 500 index in 2017.
The S&P 500 Index (SPX-INDEX) gained 19.6% in 2017 and fell 5.1% between February 1, 2018, and February 9, 2018. Major technology stocks Apple, Alphabet, and Facebook fell 6.2%, 11.5%, and 5.7%, respectively, during that timeframe.
In the final part of this series, we’ll analyze Leon Cooperman’s largest holdings in 3Q17.