Leon Cooperman is one of the best living investors. He’s the founder of Omega Advisor, a $4.5 billion hedge fund based in New York.

According to Leon, “This is the most difficult environment I’ve lived through. And I’ve been doing this for 41 years.”

Capital & Crisis editor Chris Mayer caught up with Leon at a value investing conference recently. Cooperman presented Atlas Pipeline (NYSE:APL) as one of his favorite ideas of the moment — a pick Chris previously recommended to Catital & Crisis readers.

More from Chris:

Atlas is a natural gas pipeline company. It owns 1,600 miles of pipeline connected to nearly 6,000 wells and is adding over 800 new wells per year. It also operates a growing interstate pipeline system in the Fayetteville Shale.

These are low-risk assets, and Atlas continues to increase its dividend every year. Cooperman expects Atlas to increase its dividend for years to come, given the prime location of its pipelines in Appalachia.

Atlas will pay about $4.25 next year. It closed yesterday at $21.70. That’s good for a yield of 17.7%! As Cooperman said, “At my age, a dividend yield like that is better than sex, but that’s just me.”

Cooperman thinks APL is worth at least $46 per share, which is close to where my numbers come in. (Hence, my “buy up-to-price” of $48 per share, which, admittedly, is sort of comical now with the stock at $17).

Comparable master limited partnerships (or MLPs) yield about 12%. As Cooperman said, he can find no reason why such a discrepancy exists. The market has completely trashed the MLP universe in general. Cooperman offered two reasons for this. The first is that these investments were popular with hedge funds that would borrow cheaper money and park it in higher-yield MLPs. The market sell-off forced many of these hedge funds to sell out of these investments.

The second is that since the credit markets are locked up and MLPs need access to capital to do “transformational acquisitions,” as Cooperman put it. The market thinks growth rates here are dead. As Cooperman pointed out, at a 17% yield, you don’t really care about growth. Even so, Cooperman thinks APL will continue to grow at low single-digit rates without access to capital, as more product passes through its existing pipelines.

Another old-timer, Seth Glickenhaus, now 94 years old, also likes the pipeline companies.

There was a nice article about Setch in The Wall Street Journal last week: “A Street Longtimer Speaks,” by E.S. Browning. He’s the chief investment officer at Glickenhaus & Co., which manages $1.8 billion. The longevity of the value crowd is always inspiring. You don’t see in-and-out traders still working it in their 90s.

Glickenhaus told the Journal, “We like pipeline stocks with good yields and stable businesses.”

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More on this topic (What's this?)

The 10 Rules for Successful Investing (Penny Sleuth, 11/17/09)

Atlas Pipeline's Processing Problems (Prudent Speculations, 10/31/08)

The 10 Rules for Successful Investing (Money Morning, 11/12/09)

Read more on Atlas Pipeline Partners, L.P., How To Invest at Wikinvest

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