In this article, we discuss the top 10 large-cap stock picks of billionaire Lee Cooperman.
Leon “Lee” Cooperman is one of the few “self-made” billionaires on Wall Street. Cooperman founded Omega Advisors in 1991 after retiring from investment bank Goldman Sachs as the chief of the asset management department of the firm. According to the latest 13F filings, the fund had a portfolio value of more than $1.7 billion at the end of the second quarter of 2021 with the top holdings concentrated in the services, technology, and basic materials sectors. The top ten holdings comprise over 56% of the entire portfolio.
Cooperman has a personal net worth of more than $2.5 billion. He was born as the son of a plumber in the South Bronx in 1943. In the 1960s, while working as a quality control engineer, he enrolled in a postgraduate program at Columbia Business School. This proved to be very beneficial for him in the long run as it provided him with the basis for his 25-year involvement with Goldman Sachs beginning 1966. In 2018, after several successful years at the market, he converted Omega Advisors into a family office.
Some of the top stocks in the investment portfolio of Omega Advisors at the end of the second quarter of 2021 included Alphabet Inc. (NASDAQ:GOOG), Fiserv, Inc. (NASDAQ:FISV), and Cigna Corporation (NYSE:CI), among others discussed in detail below. The investment philosophy of Cooperman revolves around balancing growth and value options in the portfolio. This has provided him with handsome returns of more than 12% annually. The success of Cooperman is an exception in the finance world that is struggling amid tech-led disruption.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Our Methodology
With this context in mind, here is our list of the 10 large-cap stock picks of billionaire Lee Cooperman. These were picked from the investment portfolio of Omega Advisors at the end of the second quarter of 2021. Only firms that have a market capitalization of more than $10 billion were selected.
The list is compiled according to the value of each holding in the portfolio of Omega Advisors. The analyst ratings of the firms are also discussed to provide readers with some more context about their investment decisions.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Billionaire Lee Cooperman’s Large-Cap Stock Picks
10. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 146
Alibaba Group Holding Limited (NYSE:BABA) is placed tenth on our list of 10 large-cap stock picks of billionaire Lee Cooperman. The firm provides technology infrastructure and related services. It operates from China. According to the latest filings, Omega Advisors owned 100,000 shares in the company at the end of the second quarter of 2021 worth $22 million, representing 1.27% of the portfolio.
On October 1, investment advisory Raymond James downgraded Alibaba Group Holding Limited stock to Outperform from Strong Buy and lowered the price target to $240 from $300, noting that a recovery from slowed ecommerce growth could take longer than anticipated given the recent crackdown in China.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited with 14 million shares worth more than $3.2 billion.
In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
9. Citigroup Inc. (NYSE:C)
Number of Hedge Fund Holders: 87
Citigroup Inc. (NYSE:C) is ranked ninth on our list of 10 large-cap stock picks of billionaire Lee Cooperman. The firm operates as a diversified financial services holding company and is headquartered in New York. According to securities filings, Omega Advisors owned 380,000 shares in the company at the end of June 2021 worth $26 million, representing 1.5% of the portfolio.
On July 6, investment advisory Keefe Bruyette assumed coverage of Citigroup Inc. stock with an Outperform rating and a price target of $85. David Konrad, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Citigroup Inc., down from 90 the preceding quarter worth $6.9 billion.
Along with Alphabet Inc., Fiserv, Inc., and Cigna Corporation, Citigroup Inc. is one of the stocks favored by hedge funds.
In its Q1 2021 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Citigroup Inc. (NYSE:C) was one of them. Here is what the fund said:
“We fully exited position in Citigroup. Global financial services company Citigroup made a $900 million clerical error and received a public reprimand from federal regulators. This, after a decade focused on process control, information technology and risk systems, makes the error substantially more costly than just the $900 million mistake. Regulators believe the company’s risk management improvements have fallen short of expectations. To rectify the situation, a process and technology spending surge could negatively affect 2021-2022 profits by 10% to 20%. Trust and confidence are important in large financial institutions, and this incident combined with the CEO’s sudden retirement shook ours.”
8. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 271
Amazon.com, Inc. (NASDAQ:AMZN) is a Washington-based diversified technology company. It is placed eighth on our list of 10 large-cap stock picks of billionaire Lee Cooperman. Latest data shows that Omega Advisors owned 10,000 shares in the company at the end of the second quarter of 2021 worth $34 million, representing 1.93% of the portfolio.
On September 30, investment advisory RBC Capital initiated coverage of Amazon.com, Inc. stock with an Outperform rating and a price target of $4,150. Brad Erickson, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Amazon.com, Inc. with 3.8 million shares worth more than $13 billion.
In its Q1 2021 investor letter, Hayden Capital, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“Amazon (AMZN):We sold our last remaining stake in Amazon this quarter. Amazon was our longest-running investment holding, after having originally purchasing it at the inception of Hayden in 2014, at a price of ~$317.
I gave some details of how Amazon has progressed over these past 6.5 years in last year’s Q2 2020 letter, which partners can find here (LINK). The company has executed amazingly well over this tenure, with revenues up ~3.3x and since our initial purchase, and reported operating income up ~30x over that period.
Generally, I believe there are three reasons to sell an investment:1) we recognize our initial thesis is wrong (sell out as quick as possible), 2) we have a significantly higher returning opportunity to redeploy the capital into (sell-down to fund the new investment), or 3) the company is maturing and hitting the top part of it’s S-curve / business lifecycle, so the business has fewer places to reinvest its capital internally. As such, the future returns will likely be lower than the past. This investment thus becomes a “source of capital” in the future, as we fund earlier-stage investment opportunities.
In the case of Amazon, we decided to sell due to the third scenario. I’m sure Amazon will continue to generate value for shareholders and continue to keep pace with the broader technology sector. However, I’m just not confident it’s as attractive an investment as when we first invested.
With ~51% of US households having an Amazon Prime account (and with very low churn), each of these households continuing to increase their annual spend with Amazon, and few / no real competitors in sight, Amazon is a dominant force that will only continue to accrue value as consumers continue to move from offline to online purchases for their everyday needs. Likewise, the “cash-flow machine” of Amazon Web Services is in a similar position of strength, with AWS now having ~32% market share and continuing to grow at +30% y/y. Because of this, I think Amazon is probably one of the safest investments in the technology sector today.
So why did we decide to sell the investment then? Simply put, Amazon is …”read the entire letter here]
7. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 238
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company with core interests in the software business. It is ranked seventh on our list of 10 large-cap stock picks of billionaire Lee Cooperman. Government filings show that Omega Advisors owned 245,705 shares in the company at the end of June 2021 worth $66 million, representing 3.73% of the portfolio.
On September 17, investment advisory Tigress Financial maintained a Buy rating on Microsoft Corporation stock and raised the price target to $366 from $303, predicting that the cloud services of the firm would deliver another record quarter of growth ahead.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation with 24.8 million shares worth more than $6.7 billion.
Alphabet Inc., Fiserv, Inc., and Cigna Corporation are some of the top stocks to buy now, just like Microsoft Corporation.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ:MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
6. Energy Transfer LP (NYSE:ET)
Number of Hedge Fund Holders: 29
Energy Transfer LP (NYSE:ET) is placed sixth on our list of 10 large-cap stock picks of billionaire Lee Cooperman. The firm provides energy-related services and is headquartered in New York. 13F filings reveal that Omega Advisors owned 6.7 million shares in the company at the end of the second quarter of 2021 worth $71 million, representing 4.02% of the portfolio.
On September 28, investment advisory Bank of America reinstated coverage of Energy Transfer LP stock with a Buy rating and a price target of $14. Chase Mulvehill, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Florida-based firm Appaloosa Management LP is a leading shareholder in Energy Transfer LP with 10.6 million shares worth more than $112 million.
In its Q1 2021 investor letter, Miller/Howard Investments highlighted a few stocks and Energy Transfer LP (NYSE:ET) was one of them. Here is what the fund said:
“Another upweight was Energy Transfer (ET), which was selling at a discount on EV/ EBITDA compared with the portfolio and had an attractive +20% FCF yield. Further, ET’s ample FCF should exceed the current distribution even if the Dakota Access Pipeline were to be shut down.”
5. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 50
Devon Energy Corporation (NYSE:DVN) is ranked fifth on our list of 10 large-cap stock picks of billionaire Lee Cooperman. The firm operates as an independent energy firm and is headquartered in Oklahoma. According to the latest filings, Omega Advisors owned 3.1 million shares in the company at the end of the second quarter of 2021 worth $91 million, representing 5.11% of the portfolio.
On July 22, investment advisory Piper Sandler maintained an Overweight rating on Devon Energy Corporation stock and raised the price target to $37 from $34, noting that “de-rate presents another attractive entry opportunity” in the sector.
Out of the hedge funds being tracked by Insider Monkey, Wyoming-based investment firm Adage Capital Management is a leading shareholder in Devon Energy Corporation with 7.5 million shares worth more than $219 million.
In its Q4 2020 investor letter, GoodHaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“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.”
4. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 63
Cigna Corporation is a Connecticut-based firm that provides insurance and related services. It is placed fourth on our list of 10 large-cap stock picks of billionaire Lee Cooperman. According to securities filings, Omega Advisors owned 425,000 shares in the company at the end of June 2021 worth $100 million, representing 5.65% of the portfolio.
On September 27, investment advisory SVB Leerink initiated coverage of Cigna Corporation stock with a Market Perform rating and a price target of $220. Whit Mayo, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Glenview Capital is a leading shareholder in Cigna Corporation with 1.2 million shares worth more than $304 million.
In its Q4 2020 investor letter, Artisan Partners Limited Partnership, an asset management firm, highlighted a few stocks and Cigna Corporation (NYSE:CI) was one of them. Here is what the fund said:
“New purchases include Cigna. Cigna is a leading managed care company which operates through the following major segments: health services, integrated medical, international markets and group disability. It’s one of the few managed care organizations in the United States with the scale and size to compete effectively. Cigna has recently focused on deleveraging its balance sheet and further diversifying its business, after completing the Express Scripts acquisition in late 2018. Additionally, the company has partnered with Amazon, which will offer two new pharmacy options—including a self-pay offering. Cigna will administer the self-pay option through its health services division Evernorth. The partnership should be one of many strong earnings drivers for Cigna, which we believe is currently trading at an attractive valuation.”
3. Fiserv, Inc. (NASDAQ:FISV)
Number of Hedge Fund Holders: 72
Fiserv, Inc. is a Wisconsin-based firm that provides payments and financial services. It is ranked third on our list of 10 large-cap stock picks of billionaire Lee Cooperman. Latest data shows that Omega Advisors owned 1 million shares in the company at the end of the second quarter of 2021 worth $110 million, representing 6.18% of the portfolio.
On September 30, investment advisory William Blair initiated coverage of Fiserv, Inc. stock with an Outperform rating and no price target, noting that the firm had developed a “diversified and global business”.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Harris Associates is a leading shareholder in Fiserv, Inc. with 12 million shares worth more than $1.2 billion.
In its Q1 2021 investor letter, Madison Funds, an asset management firm, highlighted a few stocks and Fiserv, Inc. (NASDAQ:FISV) was one of them. Here is what the fund said:
“This quarter we researched several new stock ideas, but because of high prices, acted on only one. Thus, a new portfolio name is Fiserv, with corporate headquarters in Brookfield, WI, just down I-94 from us. Fiserv is a technology company serving financial institutions (“FIs”) and retail merchants. It has two main business lines. In the first, it’s a market leader in outsourced IT solutions for banks and credit unions, online and mobile banking technology, digital money movement solutions, and card issuing services. Fiserv’s second core business is merchant acquiring and processing, where it’s a leader in providing a variety of solutions to help all types of merchants accept digital payments. They entered this business through the acquisition of First Data in 2019.
Within the first business, Fiserv’s software is critical to the daily operations of FI clients. Their solutions not only provide the vital central processing systems, but also enable services such as electronic bill pay and digital money transfers at both large institutions and local banks and credit unions alike. As such, it is an incredibly sticky business that is resilient through economic cycles. On the merchant acquiring side of Fiserv, they process trillions of dollars annually for millions of merchant clients. Their solutions cater to all types of merchants and optimize for seamless acceptance and high authorization rates while also limiting fraud. Similar to the IT outsourcing business, Fiserv’s merchant solutions are critical to their customers’ daily operations. Furthermore, we are especially encouraged by their investments in new solutions, particularly Clover and Carat. Clover is a small and midsize business merchant acquiring platform and Carat is an e-commerce acquiring platform. Both these products hit the bullseye in terms of the way people are interacting with the retail industry, and both are growing at above market rates, which we believe will sustain into the future.
In addition to Fiserv’s favorable business characteristics and competitive positioning, the management team, led by CEO Frank Bisignano, has a track record of successfully investing for growth, improving profitability, and intelligently allocating excess capital. We believe these value-creating activities will continue going forward.
Financial institutions are increasingly making investments to digitize their customer facing products and digital payments are increasingly taking share from cash as a form of payment. As a result, demand for Fiserv’s solutions, should continue to grow nicely in the coming years. In our view, Fiserv offers a nice combination of above average growth, high profitability, business resiliency, and shareholder-friendly management. We do not believe these characteristics were fully reflected in Fiserv’s share price when we made our investment during the quarter at a discount to the market’s 2021 price-to-earnings (P/E) multiple, a valuation level well below Fiserv’s historical premium.
An offsetting trade was the sale of Cognizant Technology Solutions, which was sold around the time Fiserv was added to the portfolio. Cognizant had been held since 2018, and we had expected it to perform similarly to another portfolio holding in the same industry, Accenture. Alas, multiple years of below industry growth challenged the investment, and despite our belief that CEO Brian Humphries could materially improve operations, recent metrics regarding elevated employee turnover and still below-average revenue growth led us to conclude that there was more heavy lifting required at the company. We decided that our investors would be better served by being invested in Fiserv rather than Cognizant.”
2. Athene Holding Ltd. (NYSE:ATH)
Number of Hedge Fund Holders: 43
Athene Holding Ltd. (NYSE:ATH) is placed second on our list of 10 large-cap stock picks of billionaire Lee Cooperman. The firm provides retirement services and is based in Bermuda. Government filings show that Omega Advisors owned 1.7 million shares in the company at the end of June 2021 worth $117 million, representing 6.58% of the portfolio.
On July 8, investment advisory Piper Sandler maintained a Neutral rating on Athene Holding Ltd. stock and raised the price target to $72.72 from $66.10. John Barnidge, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Athene Holding Ltd., down from 44 in the preceding quarter worth $1.3 billion.
1. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Alphabet Inc. is ranked first on our list of 10 large-cap stock picks of billionaire Lee Cooperman. The company operates as a technology firm and is headquartered in California. 13F filings reveal that Omega Advisors owned 60,000 shares in the company at the end of the second quarter of 2021 worth $146 million, representing 8.22% of the portfolio.
On September 17, investment advisory Jefferies maintained a Buy rating on Alphabet Inc. stock and raised the price target to $3,325 from $3,150. Brent Thill, an analyst at the advisory, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. with 2.9 million shares worth more than $7.3 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
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This article is originally published at Insider Monkey.
