In this article, we discuss 5 favorite stocks of billionaire Leon Cooperman. If you want to see more of the billionaire’s favorite stocks, check out 10 Favorite Stocks of Billionaire Leon Cooperman.
5. Fiserv, Inc. (NASDAQ:FISV)
Omega Advisors’ Stake Value: $106,966,000
Percentage of Omega Advisors’ 13F Portfolio: 5.37%
Number of Hedge Fund Holders: 61
Fiserv, Inc. (NASDAQ:FISV) was incorporated in 1984 and is headquartered in Brookfield, Wisconsin. The company offers payment technology and financial services to customers worldwide. On April 12, Cowen analyst George Mihalos downgraded Fiserv, Inc. (NASDAQ:FISV) to Market Perform from Outperform with a price target of $126, down from $144.
Leon Cooperman’s Omega Advisors held a stake in Fiserv, Inc. (NASDAQ:FISV) worth approximately $107 million in the December quarter, representing 5.37% of the total 13F securities.
In 2021, Fiserv, Inc. (NASDAQ:FISV) reported a full-year revenue of $16.2 billion, compared to a revenue of $14.8 billion in the previous year. Net income in 2021 grew 39.25% year-over-year to $1.3 billion, versus $958 million in 2020.
According to Insider Monkey’s Q4 data, 61 hedge funds were bullish on Fiserv, Inc. (NASDAQ:FISV), compared to 65 funds in the previous quarter. The collective stakes owned by the hedge funds in the fourth quarter amounted to $3.90 billion. Harris Associates is the biggest position holder in Fiserv, Inc. (NASDAQ:FISV), with 23.3 million shares worth $2.4 billion.
Here is what ClearBridge Investments Value Equity Strategy has to say about Fiserv, Inc. (NASDAQ:FISV) in its Q4 2021 investor letter:
“While the threat of disruption risk to these established payment companies should not be taken lightly, it is important to note that many of these emerging disruptors are small relative to the massive global payments network and heavily reliant on the very payment infrastructure they are trying to disrupt. This led us to initiate a position in Fiserv, whose stock dropped to a level that embedded projections for negative long-term growth despite no current evidence of disruption. We think Fiserv will continue to grow despite perceived disruption risks given its scale and efficiency. Fiserv also owns cloud-based payments hardware and software system Clover, which is both bigger and faster growing than Square; this provides an additional degree of protection against further disruption risk.”
4. Devon Energy Corporation (NYSE:DVN)
Omega Advisors’ Stake Value: $119,881,000
Percentage of Omega Advisors’ 13F Portfolio: 6.02%
Number of Hedge Fund Holders: 51
Devon Energy Corporation (NYSE:DVN) is an Oklahoma-based energy company that produces and distributes oil, natural gas, and natural gas liquids in the United States. Leon Cooperman owns over 1 million shares of Devon Energy Corporation (NYSE:DVN) as per the 13F filings from Q4 2021, worth $119.8 million, representing 6.02% of the total securities.
Devon Energy Corporation (NYSE:DVN)’s year-end revenue for 2021 came in at $13.1 billion, compared to $4.5 billion in the preceding year. The 2021 net income of $2.8 billion rebounded sharply from the $2.6 billion net loss in the last year.
On February 15, Devon Energy Corporation (NYSE:DVN) declared a $1.00 per share quarterly dividend. The dividend was distributed on March 31, to shareholders of the company as of March 14. Devon Energy Corporation (NYSE:DVN)’s dividend yield on April 18 stood at 6.30%.
Piper Sandler analyst Mark Lear on April 7 reiterated an Overweight rating on Devon Energy Corporation (NYSE:DVN) and raised the firm’s price target on the stock to $80 from $67. With Russian oil and product exports off the market, Piper’s Energy Macro team sees the United States with suppliers who have the capacity to deliver in the long-term, the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey, 51 funds held long positions in Devon Energy Corporation (NYSE:DVN) at the end of December 2021, up from 48 funds in the previous quarter. Rajiv Jain’s GQG Partners is the biggest stakeholder of the company, with 14.5 million shares worth close to $639 million.
Here is what GoodHaven Capital Management has to say about Devon Energy Corporation (NYSE:DVN) in their Q4 2020 investor letter:
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
3. Athene Holding Ltd. (NYSE:ATH)
Omega Advisors’ Stake Value: $133,328,000
Percentage of Omega Advisors’ 13F Portfolio: 6.69%
Number of Hedge Fund Holders: N/A
Athene Holding Ltd. (NYSE:ATH) is an insurance company that offers retirement savings products for individuals and institutions in the United States, Bermuda, and Canada. Leon Cooperman’s hedge fund slashed its stake in Athene Holding Ltd. (NYSE:ATH) by 8% in Q4 2021, but still held 1.60 million shares of the company, worth $133.3 million. The stock represents 6.69% of the total 13F securities.
Athene Holding Ltd. (NYSE:ATH)’s revenue for 2021 stood at $26.3 billion, up from $14.7 billion in the preceding year. The net income for 2021 came in at $3.85 billion, compared to $1.5 billion in 2020.
Among the hedge funds tracked by Insider Monkey, Matthew Halbower’s Pentwater Capital Management held the biggest stake in Athene Holding Ltd. (NYSE:ATH) at the end of December 2021, with 2.2 million shares worth $189.5 million.
2. Alphabet Inc. (NASDAQ:GOOG)
Omega Advisors’ Stake Value: $173,822,000
Percentage of Omega Advisors’ 13F Portfolio: 8.73%
Number of Hedge Fund Holders: 158
Leon Cooperman held 60,000 Alphabet Inc. (NASDAQ:GOOG) shares as per the securities filings from Q4 2021, worth $173.8 million, representing 8.73% of the total 13F portfolio. Alphabet Inc. (NASDAQ:GOOG) has featured on the billionaire’s portfolio since Q3 2015, and after disposing of the stock in Q2 2020, he purchased the shares again in the next quarter.
On March 10, Deutsche Bank analyst Ben Black initiated coverage of Alphabet Inc. (NASDAQ:GOOG) with a Buy rating and a $3,150 price target. According to the analyst, Alphabet Inc. (NASDAQ:GOOG) is a structural winner amid the growing trend of commerce and services shifting from physical storefronts to digital venues. He added that Google is at the intersection of merchants and consumers and “clearly stands to benefit” from e-commerce increasingly becoming a global retail channel.
Among the hedge funds tracked by Insider Monkey, 158 funds were long Alphabet Inc. (NASDAQ:GOOG) at the end of December 2021, compared to 156 funds in the prior quarter. Chris Hohn’s TCI Fund Management held the leading stake in the company, with shares worth $8.5 billion.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2022 investor letter:
“Additionally, we added to our position in Alphabet (NASDAQ:GOOG), whose valuation we found attractive amid the market selloff early in the quarter, particularly given its dominant position in search, its scaling opportunities in cloud services, and its relative insulation from Apple (NASDAQ:AAPL)’s privacy initiatives, which do not affect Alphabet’s core search business the way they do other large tech platforms.”
1. Mr. Cooper Group Inc. (NASDAQ:COOP)
Omega Advisors’ Stake Value: $176,801,000
Percentage of Omega Advisors’ 13F Portfolio: 8.88%
Number of Hedge Fund Holders: 38
Mr. Cooper Group Inc. (NASDAQ:COOP) was incorporated in 2015 and is based in Coppell, Texas, providing mortgage loans and financial assistance to customers. Securities filings for Q4 2021 reveal that Leon Cooperman owns 4.2 million shares of Mr. Cooper Group Inc. (NASDAQ:COOP), worth $176.8 million, representing 8.88% of the total 13 F holdings. Mr. Cooper Group Inc. (NASDAQ:COOP) is the biggest stock holding in Cooperman’s portfolio.
On February 15, Barclays analyst Mark DeVries raised the firm’s price target on the shares to $51 from $46 and maintained an Equal Weight rating on Mr. Cooper Group Inc. (NASDAQ:COOP). “Strong results” in servicing led to the Q4 earnings beat while origination results were mostly in line as the market normalizes, the analyst told investors in a research note.
According to the database of Insider Monkey, 38 hedge funds were bullish on Mr. Cooper Group Inc. (NASDAQ:COOP) at the end of the fourth quarter of 2021, up from 27 funds in the earlier quarter. Ric Dillon’s Diamond Hill Capital owned a significant stake in the company, with 2.8 million shares worth $117.3 million.
Here is what Voss Capital has to say about Mr. Cooper Group Inc. (NASDAQ:COOP) in their Q4 2020 investor letter:
“Another new long that is a value oriented special situation is Mr. Cooper (COOP). COOP is trading at 6x NTM earnings and under 1x NTM tangible book. Like MBIN, we believe the shares offer an asymmetric bet towards ongoing strength in mortgage originations and refinancing activity along with hard catalysts in the next 6-12 months that should force the stock to re-rate.
Mr. Cooper’s business segments offer natural hedges to each other. When rates rise, their mortgage servicing business does better; when rates fall (like now) their refinance and mortgage originations division does better. If there is mortgage market weakness or consumer distress and foreclosures surge, their Xome business, an online real estate marketplace known for auctions, thrives.
Our thesis for Mr. Cooper is two-fold. Firstly, we believe the stock has been “held back” because it is perceived to be a temporary, but unsustainable, beneficiary of the spike in refinancing. Not only do we believe refinancing can continue into 2021 (refi mortgage apps up 45.6% y/y for the week ended February 5th), which will increase book value, but we also believe their mortgage servicing business will pick up when refinancing and originations ebb, smoothing the earnings far more than is currently priced in.
Secondly, management has telegraphed their intent to sell Xome, either part or in whole, and have been adamant the business is worth “at least $1 billion”, a number that seems both plausible and potentially conservative in the current market environment with frothy FinTech/marketplace valuations. While Xome’s results are present on the income statement, its value is nowhere to be found on the balance sheet. With a sale in the $1 billion range Mr. Cooper will be swimming in cash like Scrooge McDuck.14 The sale will also materially increase tangible book value per share, which is how most investors value the stock. Because of tax accounting around their Net Operating Losses(NOLs), the company will have more flexibility around buybacks and special dividends starting in August. So, our thesis is that a sale of Xome will occur and the market will either push the company to at least tangible book value, or management will force the issue by aggressively buying back stock and/or issuing a large special dividend. We think the stock has >35% upside over the next six months.”
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