We recently compiled a list of the Billionaire Lee Cooperman Says The Market Is Expensive But These 10 Stocks Are Cheap. In this article, we are going to take a look at where Fidelis Insurance Holdings Limited (NYSE:FIHL) stands against the other cheap stocks.
Leon Cooperman recently shared his conservative outlook on the economy and discussed stocks that he is monitoring during a CNBC interview. He believes the U.S. is heading toward a fiscal disaster due to a lack of attention on rising debt. He also noted that nothing seems overvalued if a 10-year bond is valued at the current rate.
“My assumption is that we are headed into a fiscal disaster in our country. There’s nobody focusing on debt creation in the economy. My second assumption is that nothing is overvalued if a 10-year bond belongs at the current rate of 3.9%.”
Cooperman compared this to the 1972 Nifty Fifty period when government bonds were at 6.5%, and several companies which had high earnings multiples, eventually went bankrupt. He pointed out that these companies, despite their high valuations, were acquired by JP Morgan.
“In the Nifty Fifty period of 1972, the government bond went 6.5%, Avon products was 65x earnings, it has declared bankruptcy. Eastman Kodak went bankrupt with 48x earnings. IBM at 37x earnings got bankrupt. These are companies that are actively being bought by JP Morgan in the US trust.”
Cooperman emphasized that with the 10-year bond yield at 3.932%, nothing appears overvalued. He expects interest rates to remain low and anticipates a Federal Reserve rate cut in September, likely by 25 to 50 basis points. He expects that this will lead to a slow positive movement in the yield curve, with the 10-year bond yield increasing and its price declining.
Leon Cooperman also mentioned that he believes the current environment is more of a “market of stocks” rather than a unified stock market. Additionally, he expressed concern about the health insurance sector, noting that these companies are trading at low multiples, even though they have been generating excess capital and buying back their own stock. Cooperman then emphasized that he is motivated by valuation levels when assessing investments.
Leon Cooperman follows a value-focused investment strategy, concentrating on undervalued stocks and using a top-down approach to select sectors. He combines fundamental analysis with a bottom-up approach to build and manage portfolios. Omega Advisors, which handles over $3.3 billion in assets largely from Cooperman’s own wealth, has approximately $4.37 billion under management for seven clients. The firm’s Q1 2024 13F filing showed $2.4 billion in managed securities, with its top ten holdings making up 61.09% of the portfolio.
Our Methodology
In this article, we review Leon Cooperman’s latest CNBC interview and highlight ten stocks he owns and mentioned. We also provided analyst ratings, key details about each company, and the number of hedge funds investing in them.
Why focus on the stocks that hedge funds invest in? Our research shows that following the top picks of leading hedge funds can result in returns that beat the market. We use this strategy in our quarterly newsletter, where we choose 14 small-cap and large-cap stocks each quarter. Since May 2014, this approach has generated a 275% return, outperforming the benchmark by 150 percentage points. (see more details here)
A woman in a business suit in an insurance office, analyzing a policy.
Fidelis Insurance Holdings Limited (NYSE:FIHL)
Number of Hedge Fund Investors: 21
Fidelis Insurance Holdings Limited (NYSE:FIHL) is a major global insurance company that provides a broad range of insurance products and services. Fidelis Insurance Holdings Limited (NYSE:FIHL) emphasizes innovation and customer-focused solutions to offer extensive coverage and effective risk management across different industries.
Leon Cooperman shared his thoughts on a recent conference call where he discussed a stock that had dropped in value, calling the market’s reaction “ridiculous.” He mentioned the insurance firm, Fidelis Insurance Holdings Limited (NYSE:FIHL), announced a $2 million buyback, representing 12% of the company, and can earn $4 in earnings per share.
“It’s so ridiculous, it’s so stupid. The company just announced a $2 million buyback, which is 12% of the company. It’s called Fidelis (FIHL), and I’m buying it as we speak. The company has a couple of million dollars in excess capital. Their book value at the end of the quarter was 21.75%. They can earn about 20% on book this year, which is around $4 in earnings. The stock is down, but in my opinion, it should be up.”
Fidelis Insurance Holdings Limited (NYSE:FIHL)’s positive outlook is largely driven by its strong ability to generate excess capital, which it has effectively used for stock buybacks. Furthermore, Fidelis Insurance Holdings Limited (NYSE:FIHL) is actively expanding its operations, such as launching new syndicates at Lloyds Banking Group PLC (NYSE:LYG), positioning itself for additional growth opportunities.
Overall FIHL ranks 10th on our list of the cheap stocks to buy. While we acknowledge the potential of FIHL as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FIHL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.