NEW YORK (TheStreet) -- On Monday, the CNBC "Fast Money Halftime Report" traders sat down with famed investor Leon Cooperman at the Ira Sohn Conference in New York City. Cooperman, who is the chairman and CEO of Omega Advisors, said stocks are fairly to fully valued at current levels. The broader market trades at 16.5 times earnings, which is neither cheap or expensive. If rates stay low for an extended period of time, then stocks are undervalued.
Yet Cooperman said he expects the Federal Reserve to raise interest rates in September or December. But that shouldn't stop stocks from continuing to rally. "I fail to see the significance," he said about the rate hike. It would be a more bearish sign if the Fed didn't raise rates, as it would suggest that the economy isn't doing well.
Historically speaking, the stock market doesn't peak for 30 months following the first rate hike. On average, stocks are higher by 9.5% one year after the first rate hike in a rising rate environment, Cooperman added.
If anything, Cooperman said, the bond market is what's overvalued, not stocks. Including dividends, he expects the S&P 500 to climb 7% to 8% for the year, to about 2,200. He said there's four things that bring on a bear market, including an economic recession, a "hostile" Fed and an overvalued and euphoric market.
The fourth factor is a geopolitical event that's unpredictable, he reasoned. But there isn't a recession on the horizon, the Fed is far from hostile and investors don't seem very euphoric about the market, which isn't overvalued, Cooperman said.
Speaking earlier at the Sohn Conference, hedge fund manager David Einhorn had slammed fracking companies for spending more money than they make and suggested that they're being too frivolous with cheap financing.
Fracking does have a very high cost of production, Cooperman said in regard to Einhorn's comments. But the cost of capital has gone up, as these equities have been crushed and high-yield bonds have gone up in price. Due to the higher cost of capital, production from fracking companies will likely decline.
Cooperman expects oil prices to rebound toward $70 per barrel by the end of 2015. He feels "comfortable" with his nearly 10% allocation to energy equities.
Joseph Terranova, senior managing director at Virtus Investment Partners, disagreed with Einhorn's comments about frackers, saying Pioneer Natural Resources (PXD - Get Report) should report "solid" earnings on Tuesday. The company has hedged 91% of its 2015 production, at $70 per barrel, and 65% of its 2016 production at $70, he reasoned.
Many fund managers are expecting natural gas to have a strong second half of 2015, added Stephen Weiss, founder and managing partner of Short Hills Capital Partners LLC. In regards to the broader market, Terranova said he expects a larger correction over the next few months, especially if corporate buybacks don't boost stock prices over the next few weeks.
Weiss said he's comfortable with a 5% to 10% correction in stock prices and still finds U.S. and European equities attractive. The bull market in bonds is "definitely over," he added. Famed investor Bill Ackman, founder and CEO of Pershing Square Capital, also joined Monday's trading panel. Referring to his short position in Herbalife (HLF - Get Report), he said investors can likely expect to see further deterioration in the fundamentals of its business when it reports earnings on Tuesday.
Researching Herbalife was a "very time-consuming" process with a lot of headaches, Ackman said. But with or without the government's intervention, the business seems to be declining.
In regards to his position in Canadian Pacific Railway (CP), Ackman said he is not pushing for a deal with CSX Corp. (CSX - Get Report), adding that merger and acquisition deals in the rail space generally have to be agreed upon, as "hostile" deals usually don't work out.