Cooperman Had Long, Often Costly Alliance With Cohen Family

  • Two companies Cooperman invested in lost 80 percent of value
  • Cohens were paid $137.5 million for running Atlas spinoff

The Case Against Leon Cooperman

Leon Cooperman, accused Wednesday of buying shares in Atlas Pipeline Partners after obtaining insider information, has been investing with the family that managed the company for more than a decade. It hasn’t always paid off.

Cooperman, 73, and his son Wayne bought stakes in at least five companies controlled or managed by Ed Cohen and his sons Jonathan and Daniel since 2000, including Atlas Resource Partners LP, Atlas Energy Group LLC, Resource America Inc. and Institutional Financial Markets Inc. Some have lost money for investors -- in two cases, more than 80 percent of their value on public exchanges.

Led by septuagenarian patriarch Ed Cohen, who has a penchant for speaking in Latin on earnings calls, the family has run small businesses spanning natural gas, banking and real estate. The Coopermans have often been among their biggest investors.

“Atlas Pipeline was one of several companies controlled by the Cohen family, a number of whose members I had known for many years,” the elder Cooperman wrote in a letter to shareholders of his $5.4 billion hedge fund, Omega Advisors, hours after he was accused of insider trading by the U.S. Securities and Exchange Commission. Cooperman also said in the letter that he and his firm hadn’t engaged in any unlawful conduct.

“We haven’t spoken for a year because of litigation,” Cooperman said in an e-mail Wednesday on his relations with the Cohens. “You’re not allowed to talk.”

Wayne Cooperman didn’t return a phone call or respond to an e-mail. Matt Barkett, a spokesman for the Cohens’ companies at Dix & Eaton, said he wasn’t immediately able to provide a comment.

Confidential Information

Cooperman was accused of insider trading in Atlas Pipeline after obtaining confidential information from an Atlas Pipeline executive in 2010 about the sale of a company asset that caused the shares to jump 31 percent, according to an SEC statement. Cooperman, who had owned 9 percent of Atlas Pipeline, described it as a “shitty business” just before buying more of its securities, the complaint said.

“The SEC is relying on a theoretical calculation of unrealized gains, not actual profits,” Cooperman said on a Wednesday afternoon call with investors. “In actuality, I’m embarrassed to say the losses were gigantic.”

The SEC complaint also mentions two other Cohen companies in which Cooperman had substantial stakes: Atlas Resource Partners, a gas and oil producer, and Resource America, which managed real estate investments. Cooperman failed to disclose purchases in Atlas Resource Partners in a timely fashion, and under-reported his ownership in Resource America, according to the complaint. 

The Cohens have had their own problems stemming from the Atlas businesses. When the family sold the energy companies to Targa Resources Corp. and Targa Resources Partners LP for $7.7 billion in February 2015, they spun off some remaining assets into a new company, Atlas Energy Group LLC, with Cooperman as the biggest shareholder. It has since lost 89 percent of its value to become a $32 million business. 

The sale has spurred at least seven lawsuits alleging the Cohens structured the deal to line their own coffers at the expense of shareholders. Ed, who is CEO, and his son Jonathan, chairman, were paid a combined $137.5 million, mostly cash, as Atlas’s stock plummeted in 2015, according to company filings. The compensation was derived from the predecessor companies, the filings said. Cooperman declined to comment on the Cohens’ compensation in a May phone interview with Bloomberg.

Cooperman and his wife sold shares of Atlas Energy Group while his Omega Charitable Partners LP purchased shares in transactions on Monday and Tuesday, according to a regulatory filing on Thursday. The trades were “designed to realize a substantial tax loss and nothing more than that,” Cooperman said in an e-mail.

Classics Scholar

Ed Cohen is the son of a Philadelphia wallpaper contractor who married Betsy Zubrow in 1965, according to a 2014 profile in the Philadelphia Inquirer. Betsy founded a bank, and the family has listed more than a dozen businesses, according to the profile. He is an adjunct professor of classical studies at the University of Pennsylvania, where he went to college and law school. Last year, Oxford University Press published his most recent book, “Athenian Prostitution: The Business of Sex.”

The Coopermans’ relationship with the Cohens stretches back to at least 2000, when Wayne Cooperman’s Cobalt Capital Management disclosed a 5 percent ownership stake in Resource America, filings show. Ed was chairman and CEO at the time and his son Daniel, then 30, was chief operating officer, according to documents. Leon Cooperman’s Omega bought more than 5 percent of the stock in 2004. The company’s shares soared through 2006 before collapsing more than 80 percent. Cooperman owned 10 percent of the business as of July. The company was acquired earlier this month.

Major investors’ stakes in publicly traded companies are typically disclosed in periodic regulatory filings that don’t necessarily reflect interim changes in size, making it difficult to calculate precise gains or losses.

Cooperman’s Omega Advisors was listed as a 7.7 percent owner of Institutional Financial Markets, where Daniel served as chairman, in the business’s 2006 proxy statement. Omega stopped filing disclosures for large owners of the company after 2009. Shares fell more than 80 percent during that time.

At least one investment in a Cohen company has paid off for the Coopermans. Atlas Energy Inc. was sold to Chevron Corp. for $4.9 billion in 2010. Wayne Cooperman had owned the stock for about a decade, according to a New York Times report at the time. Given that time frame, an investment would have increased at least 15-fold.

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