In this article, we will look at 10 undervalued stocks to buy according to billionaire Leon Cooperman. If you want to skip reading about Leon Cooperman’s early life, investment philosophy, and his hedge fund’s performance, you can go directly to 5 Undervalued Stocks to Buy According to Billionaire Leon Cooperman.
Leon Cooperman is an American billionaire investor and hedge fund manager. Mr. Cooperman comes from humble beginnings. Born into a family of Polish immigrants, Leon Cooperman worked his way up to the top. He was the first person in his family to earn a college degree, and he did not stop there. Mr. Cooperman went on to earn an advanced degree in business management from Columbia Business School, from where he graduated in 1967.
Leon Cooperman is a prominent and credible figure in the hedge fund industry. He is known for conducting extensive market research before initiating or exiting positions in public equity. Mr. Cooperman has prioritized following a value-investing approach toward stock-picking and has been successful in spotting potential in undervalued companies.
As of the fourth quarter of 2021, Mr. Cooperman manages more than $1.99 billion in 13F securities through his hedge fund, Omega Advisors. The fund has investments across a diverse range of industrial sectors including financials, technology, healthcare, energy, and materials, among others. Omega Advisors has a top ten holdings concentration of 58.1%. Among the Omega Advisors’ most notable stock picks we have Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
Undervalued Stocks to Buy According to Billionaire Leon Cooperman
10. Arbor Realty Trust, Inc. (NYSE:ABR)
Omega Advisors’ Stake Value: $42,918,000
Percentage of Omega Advisors’ 13F Portfolio: 2.15%
PE Ratio as of May 25: 9.50
Number of Hedge Fund Holders: 14
Arbor Realty Trust, Inc. (NYSE:ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. Arbor Realty Trust, Inc. (NYSE:ABR) is one of the best undervalued stocks to buy according to Leon Cooperman. As of May 25, the stock has a forward PE ratio of 9.50, trading at $16.12 with a market capitalization of $2.77 billion.
Analysts are bullish on Arbor Realty Trust, Inc. (NYSE:ABR). On April 25 Piper Sandler analyst Crispin Love initiated coverage of the stock with an Overweight rating and a $20 price target. The analyst cited the company’s diversified revenue model, industry tailwinds in the multifamily bridge space, and an attractive valuation while giving his opinion on the stock.
By the end of Q1 2022, 14 hedge funds were long Arbor Realty Trust, Inc. (NYSE:ABR) with stakes worth $92.53 million. Of these, $42.91 million were attributed to Omega Advisors. The investment covers 2.15% of Leon Cooperman’s 13F portfolio.
9. General Motors Company (NYSE:GM)
Omega Advisors’ Stake Value: $43,973,000
Percentage of Omega Advisors’ 13F Portfolio: 2.2%
PE Ratio as of May 25: 5.02
Number of Hedge Fund Holders: 76
On May 10, Berenberg analyst Adrian Yanoshik initiated coverage of General Motors Company (NYSE:GM) with a Buy rating and a $55 price target.
At the close of Q1 2022, 76 hedge funds held stakes in General Motors Company (NYSE:GM). The total value of these stakes was $5.50 billion. This is compared to 90 hedge funds in the previous quarter with stakes worth $7.13 billion.
Some of the most notable stock picks of billionaire investor Leon Cooperman include General Motors Company (NYSE:GM), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
Oakmark Funds mentioned General Motors Company (NYSE:GM) in its “Oakmark Global Fund” first-quarter 2022 investor letter, and explained why the company is “significantly undervalued”:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
8. Lithia Motors, Inc. (NYSE:LAD)
Omega Advisors’ Stake Value: $44,543,000
Percentage of Omega Advisors’ 13F Portfolio: 2.23%
PE Ratio as of May 25: 5.98
Number of Hedge Fund Holders: 46
Lithia Motors, Inc. (NYSE:LAD) operates as an automotive retailer in the United States. The company operates through three business segments: Domestic, Import, and Luxury.
As of April 21, Wells Fargo analyst Colin Langan has a $350 price target and an Overweight rating on Lithia Motors, Inc. (NYSE:LAD).
At the close of Q1 2022, 46 hedge funds were bullish on Lithia Motors, Inc. (NYSE:LAD) with stakes worth $2.55 billion. One of these hedge funds was Omega Advisors, which held sizeable stakes of $44.54 million in the company, up 10% from its Q4 2021 stakes. Lithia Motors, Inc. (NYSE:LAD) represents 2.23% of Omega Advisors’ 13F portfolio.
Here is what Oakmark Funds said about Lithia Motors, Inc. (NYSE:LAD) in its first-quarter 2022 investor letter:
“As is typical during periods of significant volatility, we added a new name to the portfolio. Lithia Motors (NYSE:LAD) is the largest franchised auto dealer group in the United States. The company has a long history of creating shareholder value through best-in-class operations and consistent acquisitions of smaller dealers at attractive returns. There is a long runway for management to continue creating value through such acquisitions. Management believes this will drive earnings per share to more than $50 by 2025, even as car prices return to pre-pandemic levels. Meanwhile, Lithia has a significant opportunity to further accelerate growth through Driveway, its online auto retailing platform. We believe Lithia’s existing nationwide infrastructure provides Driveway with significant competitive advantages in e-commerce, which smaller dealers will struggle to replicate. Driveway is not generating any earnings today, but it could become a major contributor over the next five to seven years. With the stock priced at less than 7x management’s 2025 EPS target and with substantial future growth potential from Driveway, we believe Lithia shares are a bargain today.”
7. Chimera Investment Corporation (NYSE:CIM)
Omega Advisors’ Stake Value: $51,336,000
Percentage of Omega Advisors’ 13F Portfolio: 2.57%
PE Ratio as of May 25: 6.57
Number of Hedge Fund Holders: 21
Chimera Investment Corporation (NYSE:CIM) operates as a real estate investment trust (REIT) in the United States. On May 5, the company announced earnings for the fiscal first quarter of 2022. Chimera Investment Corporation (NYSE:CIM) generated quarterly revenues of $137.70 million, up 1.96% year over year, but missed estimates by $3.32 million. The company registered an EPS of $0.39 and exceeded estimates by $0.02.
Chimera Investment Corporation (NYSE:CIM) is an undervalued dividend payer. As of May 25, the stock has a PE ratio of 6.57 and a hefty forward yield of 13.85%. On May 4, Chimera Investment Corporation (NYSE:CIM) declared a quarterly cash dividend of $0.33 per share. The dividend is payable on July 28 to investors of record at the close of business on June 30.
As of April 27, Barclays analyst Mark DeVries has an $11 price target and an Underweight rating on Chimera Investment Corporation (NYSE:CM).
6. Energy Transfer L.P. (NYSE:ET)
Omega Advisors’ Stake Value: $57,610,000
Percentage of Omega Advisors’ 13F Portfolio: 2.89%
PE Ratio as of May 25: 7.33
Number of Hedge Fund Holders: 31
Another significantly undervalued dividend payer adored by billionaire Leon Cooperman is Energy Transfer L.P. (NYSE:ET). As of May 25, the stock has a forward yield of 7.16%, a PE ratio of 7.33, and is trading at $11.44 with a market capitalization of $34.28 billion. Omega Advisors owns 7 million shares of Energy Transfer L.P. (NYSE:ET) which amount to a stake of $57.61 million.
Analysts are getting bullish on Energy Transfer L.P. (NYSE:ET). On April 26, Morgan Stanley analyst Robert Kad raised his price target on Energy Transfer L.P. (NYSE:ET) to $15 from $12 and reiterated an Overweight rating on the shares.
At the end of Q1 2022, 31 hedge funds were long Energy Transfer L.P. (NYSE:ET) with stakes worth $699.42 million. This is compared to 36 hedge funds in the prior quarter with stakes worth $635.60 million.
Mr. Cooperman’s hedge fund holds a hefty stake in Energy Transfer L.P. (NYSE:ET). Other stocks Omega Advisors is heavily invested in include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
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Disclose. None. 10 Undervalued Stocks to Buy According to Billionaire Leon Cooperman is originally published on Insider Monkey.
