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thinks problems exist. He has been known to be extremely open about top management's performance. He actively attends annual meetings and has been highly critical of management when he believes such criticism is warranted. The press recently reported such an episode at the Warnaco annual meeting.1

Cooperman calls himself an investor, not a trader, because the majority of the portfolio is expected to be held for at least two years. There are exceptions, however: if his price objective has been met, if initial expectations on the company don't materialize and a decision is made to cut losses, if he finds a better idea than the one he owns, or if his view on the market changes.

In conjunction with its macroeconomic analysis, Omega pursues a bottom-up approach to stock selection. Cooperman talks about five ways to make money: first, determining market direction (i.e., forecasting the anticipated investment environment); second, spending lots of time on the asset allocation decision, which Cooperman feels is more important than being in the right stock (e.g., determining the relative attractiveness of U.S. versus non-U.S. or stocks versus fixed income); third, buying undervalued stocks; fourth, selling overvalued stocks; and fifth, nonconventional financial assets, such as currencies.

Cooperman differentiates a company's two values—public market value and private market value. Private market value reflects the price an informed buyer would pay for control of a company. Public market value is the price a marginal investor would pay for a minority position. Private market value is an imprecise concept that can only be estimated. Public market value is a precise figure published daily in the press.

Private market value, though imprecise, is stable and changes only gradually over time. Public market value, though precise, is volatile and can change in one day. Private value is determined by a company's economic prospects. He compares the current price—the public market value—of a company's stock with its private value and evaluates the potential catalysts for change.

In analyzing the investment environment, Cooperman assesses many factors. He analyzes the economic environment, monetary policy, valuation of the market and individual sectors, supply/demand patterns within markets, consumer and investor sentiment, quality of attractive investment opportunities, and technical indicators.