The unlikely rise of GameStop stock was already seen by someas a populist war against Wall Street – average investors rallying online to hurtpowerful financial firms by sending unexpected businesses soaring.
Then a billionaire hedge fund manager, once charged with insider trading, went on CNBC to share his concerns.
Leon Cooperman’s reaction to the GameStop saga – which spawned derisive tweets and made it to the top of Cooperman’s Wikipedia page – brought the currents of class warfare to new heights, even as another debate raged online about how people should view the recent stock market roller coaster and the forces behind it.
Cooperman, the 77-year-old founder of Omega Advisors, spoke scathingly of the “Robinhood market,” a reference to the no-fee stock-trading app and the nonprofessional investors it attracts. He called that market a “loser game” played by people who “don’t have any idea what they’re doing.”
“The reason the market is doing what it’s doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates,” he said, pointing to policies that he said are meant to stimulate the economy and respond to mass unemployment during the coronavirus pandemic.
And he criticized calls for the rich to pay their “fair share” of taxes, expressing his disdain with an expletive.
“It’s just a way of attacking wealthy people, and you know I think it’s inappropriate,” he told viewers. “We all gotta work together and pull together.”
Speaking later with The Washington Post, Cooperman repeatedly rejected the idea that the GameStop drama represents an uprising against Wall Street and the wealthy.
The investors pushing up GameStop stock are just people “looking to get rich,” he said, adding that he does not begrudge them for it. He said he does not have a stake in the gaming company.
Cooperman defended himself and his fellow billionaires as contributing to society, ticking through a long list of charitable donations: “I pay college tuition for a thousand Black kids in Newark, New Jersey . . .”
He sounded alarms about the GameStop investors’ prospects earlier Thursday, echoing others who see investors’ rush to GameStop, BlackBerry, AMC Theaters and more as highly risky rather than a populist triumph.
“GameStop has become a pyramid scheme,” Michael Pachter, an analyst with Wedbush Securities, previously told The Post. “Pyramid schemes work as long as new investors believe there will be new investors behind them. When it’s clear nobody else is going to come in, they are less likely to participate.”
“This is not gonna end well. . . It will end very badly for the public,” Cooperman predicted on CNBC Thursday.
Cooperman’s comments came as many politicians and public figures heralded the GameStop phenomenon as an average person’s rebellion against Wall Street interests that had long gotten away with destructive behavior. Posting on Reddit’s “wallstreetbets” forum, investors dramatically increased the fortunes of stocks that hedge funds had bet against – prompting restrictions on trading that only stirred more angst against big financial firms as shares of GameStop and other stocks dropped Thursday.
Former “Daily Show” host Jon Stewart weighed in with a brand-new Twitter account: “The Redditors aren’t cheating, they’re joining a party Wall Street insiders have been enjoying for years. Don’t shut them down . . . maybe sue them for copyright infringement instead!!”
Sen. Bernie Sanders, I-Vt., tweeted, “The business model of Wall Street is fraud.”
Another progressive icon, Sen. Elizabeth Warren, D-Mass., was focused in a Thursday CNBC interview on how to address “market manipulation.”
“The GameStop roller coaster shows what can happen when the stock market is played like a casino and the SEC can’t or won’t stop market manipulation,” she tweeted afterward. “If we want a healthy stock market, we need a cop on the beat to do their jobs.”
But ideological opposites ranging from Rep. Alexandria Ocasio-Cortez, D-N.Y., to Sen. Ted Cruz, R-Texas, to entrepreneur Elon Musk have all expressed sympathy for the non-professional investors, questioning Robinhood’s move to, as Ocasio-Cortez put it, “block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.”
“We didn’t see anyone go to jail for that,” Ocasio-Cortez said Thursday of Wall Street during the mortgage crisis. “We didn’t see virtually anybody held accountable in any serious way.” The appearance of a populist revolt with GameStop felt like the first time anyone was held to account, she said.
Calling for more information about Robinhood’s decision-making, Ocasio-Cortez said that she would support a hearing “if necessary” as part of the House Financial Services Committee.
She also alluded to Cooperman, who – to some critics – seemed to embody Wall Street’s alleged misdeeds. In 2016, federal prosecutors charged Cooperman with using confidential information to generate “substantial illicit profits,” and he and Omega Advisors eventually settled for nearly $5 million without admitting wrongdoing.
Ocasio-Cortez said that hedge fund executives can go on CNBC and seek to influence millions of people.
“When was the last time you saw a retail investor getting airtime for that?” she said.
Cooperman is no stranger to intense debates over wealth and inequality in America. Thursday’s TV appearance quickly drew comparisons to a 2019 interview in which the hedge fund manager decried “the vilification of billionaires,” responding to then-presidential hopeful Warren and her calls for higher taxes on the richest Americans.
“I don’t need Elizabeth Warren telling me that I’m a deadbeat and that billionaires are deadbeats . . . The world is a substantially better place because of Bill Gates, Michael Bloomberg, David Rubenstein, Bernie Marcus, Ken Langone,” Cooperman said.
“This is idiocy!” he said. “It’s appealing to the lowest common denominator and basically trying to turn people’s heads around by promising a lot of free stuff.”
People for Bernie, a pro-Sanders group, on Thursday harked back to a 2020 presidential campaign video in which Sanders declares, “We got billionaires going on television crying that they’re gonna have to start paying their fair share of taxes.”
He speaks over footage of Cooperman getting emotional. A label in the corner of the video reads, “SAD BILLIONAIRE.”
Cooperman – who according to Forbes is worth $2.5 billion – said he believes the rich should pay more in taxes, just not as much as his critics advocate. He believes in philanthropy, he said.
“I’m not a greedy guy,” he said. “I believe in equal opportunity.”
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The Washington Post’s Hamza Shaban contributed to this report.