Leon Cooperman, chairman and CEO of Omega Advisors, believes an efficient tax strategy was a key driver of Warren Buffett’s amazing track record.
The billionaire investor was asked who he thought was the greatest investor of all time.
“How can you not say Warren Buffett? What’s distinguished about Buffett’s record, which I don’t think people talk about enough, is the tax aspects of his record,” Cooperman said Tuesday on CNBC’s “Halftime Report.” “Warren is a very tax sensitive investor.”
The hedge fund manager shared an example of a short-term trader buying and selling a stock after a 15 percent gain every year, who has to pay taxes annually versus the benefit of holding stocks for the long-term.
“As opposed to finding a great compounder, a 15 percent grower that you held on, 40 years from today, you’d had thousands of times more money after tax. He’s a very tax conscious investor,” he said. Buffett’s “returns pre-tax are competitive, but his returns after tax are enormous because of the way he runs his money.”
Buffett’s track record is unparalleled. From 1965 to 2017, Berkshire Hathaway’s rising market value generated a 20.9 percent annual return compared to S&P 500’s 9.9 percent, resulting in a cumulative gain of 2,404,748 percent versus the market’s 15,508 percent return.
Cooperman founded Omega Advisors in 1991. The firm has approximately $3.4 billion in assets under management, according to its website.
