Benzinga - Omega Advisors chairman and CEO Leon Cooperman believes we are in the midst of a stock picker's market, and he's placing his bets on oil.
What To Know: Although Cooperman is cautious on the markets overall as a result of "economic mismanagement," he sees upside in a barrel of energy names.
"This whole energy crisis could be dealt with if we just gave some economic incentives to the oil companies to produce rather than trashing them," he said Monday on CNBC's "Squawk Box."
Cooperman told CNBC that 20% of his portfolio is now in oil and his thesis is built on a couple of key points.
First, he expects world travel to continue to rise as China comes out of its lengthy lockdown period, which should stimulate demand, he said. Cooperman also noted that the U.S. is set to begin replenishing its strategic petroleum reserves, which were depleted in 2022 while oil prices were elevated.
"I've found over many years of doing this, if I bought things yielding 5% to 10%, say at three times cash flow, I tend to get lucky," he said.
Cooperman told CNBC he has a number of large positions including Devon Energy Corp (NYSE: DVN) and Pioneer Natural Resources Co (NYSE: PXD), but his two favorite positions are Paramount Resources Ltd (Pink: PRMRF) and Tourmaline Oil Corp (Pink: TRMLF).
"You look at Paramount, it has no debt, it yields over 5%, it's growing production at over 15%, it has a cost of production at $31 a barrel and you know, I don't see how you go wrong with something like that," Cooperman said.
Oil Price Action: Several oil stocks are trading higher Monday after OPEC+ made a surprise announcement to slash oil output by approximately 1.16 million barrels per day.
Paramount was up 5.07% at $23.01 and Tourmaline was down 0.26% at $41.52 at the time of writing, according to Benzinga Pro.
This illustration was generated using artificial intelligence via MidJourney.
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