Leon Cooperman’s Omega Advisors recently filed a 13G with the SEC, reporting the sale of its stake in Caesars Entertainment Corp (NASDAQ:CZR). As per its 13F filing for the reporting period of March 31, 2015, the investment manager had a position in Caesars Entertainment consisting of 7.33 million shares valued at $77.21 million. What is of more interest is that Caesars Entertainment Corp (NASDAQ:CZR) is not the only company whose stock have been sold by the investment manager in recent months. Omega Advisors sold its entire stake in HCA Holdings Inc (NYSE:HCA), Gilead Sciences, Inc. (NASDAQ:GILD), Cabot Oil & Gas Corporation (NYSE:COG), and Apple Inc. (NASDAQ:AAPL), as reported in its most recent 13F filing. We’ll take a look at these sales in this article and try to determine why Cooperman has moved out of them.
We follow hedge funds like Omega Advisors because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 142%, outperforming the S&P 500 ETF by nearly 84 percentage points (see more details here).
Leon Cooperman’s latest 13G mentioned the sale of its entire stake in Caesars Entertainment Corp (NASDAQ:CZR) on June 5, 2015. After considering the stock market performance of the casino/entertainment company, Cooperman’s decision seems justified, as the shares of Caesars Entertainment have declined 59.22% year-to-date. On top of its dismal stock market performance, the entertainment company is facing multiple lawsuits, including one brought against it by UMB Bank, with potential damages exceeding $6 billion. According to the bank, Caesars Entertainment Corp (NASDAQ:CZR) breached the terms of its first-lien notes by notwithstanding the guarantee of its operating unit’s obligations. The hospitality service company said that the lawsuit is without merit and its restructuring agreement with the fund holders stays intact. Paulson & Co and Mason Capital Management are among investment managers that hold substantial positions in the hospitality service provider.
HCA Holdings Inc (NYSE:HCA) is another company in which Cooperman sold out of his entire stock position. As per the 13F filing of Omega Advisors, the investment manager disposed of 1.09 million shares of the healthcare service company. What makes it a surprising decision is the fact that the shares of HCA Holdings Inc (NYSE:HCA) have improved 13.64% year-to-date. The stock reached its all-time high earlier this month at $85.06 per share and is among the top gainers in the healthcare industry over the last three months. Lone Pine Capital and Glenview Capital are among the major stockholders of HCA Holdings Inc (NYSE:HCA).
Cooperman has disposed of his entire stake in two healthcare companies, HCA Holdings and Gilead Sciences, Inc. (NASDAQ:GILD). The investment manager sold 612,500 shares of the latter, whose shares have spiked 25.74% year-to-date. Gilead Sciences, Inc. (NASDAQ:GILD)’s shares reached an all-time high of $121.78 earlier this week. There is no specific reason behind this boost except for the improving HCV prescriptions in June. Gilead Sciences is involved in a bidding war with Teva Pharmaceutical Industries Ltd. (ADR) (NYSE:TEVA) and AstraZeneca Plc. (ADR) (NYSE:AZN) for the acquisition of Receptos Inc. (NASDAQ:RCPT). The shares of Receptos Inc. have skyrocketed in the last two weeks as a result, including an increase of 15.95% between June 10 and June 19, 2015. Columbus Circle Investors and AQR Capital Management have large stakes in Gilead Sciences, Inc. (NASDAQ:GILD).
In the list of stocks disposed of by Cooperman recently is Cabot Oil & Gas Corporation (NYSE:COG). The fund manager sold out of his 1.49 million shares of the oil and gas company, whose shares have improved by 11.22% year-to-date. According to a recent report from investment-banking boutique KLR Group, Cabot Oil & Gas Corporation (NYSE:COG) is a low-risk, high-yield stock in the energy sector, while also being a potential takeover target. This would appear to make it a very attractive stock, though of the 19 analysts that cover it, they maintain an average rating of ‘Hold’ on it, along with an average price target of $35.08, representing limited perceived upside, of about 6%. Magnetar Capital and D E Shaw hold major stakes in Cabot Oil & Gas Corporation (NYSE:COG), which has a dividend yield of 0.24%.
Perhaps the most surprising sell-off of all from Cooperman’s portfolio was that of Apple Inc. (NASDAQ:AAPL), as the fund manager sold 383,790 shares of the iPhone maker. The Watch maker is known to launch amazing products and it has a growing consumer base throughout the world. In a recent report, Apple Inc. (NASDAQ:AAPL) is working towards the next version of Apple Watch and the company is likely to introduce several new features in Apple Watch 2. Some of the prominent upgrades include a FaceTime Video Camera and the ability to work without being connected to an iPhone. The device will reportedly be available in the hefty price range of $1,000 to $10,000 for a gold Apple Watch edition, with an expected launch in 2016. Apple Inc. (NASDAQ:AAPL) has received big investments from the likes of Icahn Capital LP and Fisher Asset Management.
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