Omega Advisors, which oversees $7 billion in assets, has been among the year's standouts with double-digit returns. Steven Einhorn, the firm's vice chairman, sees below consensus earnings given a combination of softer revenue growth and profit margins reverting to the mean.
"Year-over-year revenue growth in the third quarter was about 1 or 2 percent. It may accelerate a bit next year but it will not be robust certainly. Second and more important, profit margins for the S&P companies are several hundred basis points above trend and profit margins are mean-reverting, not immediately but over time."
"Year-over-year revenue growth in the third quarter was about 1 or 2 percent. It may accelerate a bit next year but it will not be robust certainly. Second and more important, profit margins for the S&P companies are several hundred basis points above trend and profit margins are mean-reverting, not immediately but over time."
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