Leon Cooperman, who runs the $6 billion Omega Advisors Inc. hedge fund, said JPMorgan Chase & Co. took a “prudent risk” when it traded in credit derivatives that have cost the bank at least $2 billion in losses.
“We live in a very competitive economy, and banks need to take a certain amount of risk,” Cooperman, whose New York-based fund owns JPMorgan shares, said today in a Bloomberg Television interview with Stephanie Ruhle. “They took the risk and it was a prudent risk.”
Congress’s inquiry into JPMorgan’s $2 billion trading loss has reignited the question of whether a bank can grow too large and complex for its own executives to oversee. JPMorgan Chief Executive Officer Jamie Dimon is appearing today in front of the House Financial Services Committee to answer questions regarding the loss. He appeared before the Senate Banking Committee on June 13.
Cooperman, 69, said he hadn’t added to his stake in JPMorgan even as the stock has fallen about 23 percent since the end of March. Omega owned 2.2 million shares at the end of the first quarter, according to a Securities and Exchange Commission filing. That position was valued at about $102 million at the time.
Even so, he said the stock is trading at attractive values now.
“For someone with a two- or three-year time horizon, you would have a nice capital gain” if you bought the bank at these levels, he said.