Billionaire Lee Cooperman’s Favorite Stocks Heading Into 2021

Below are the billionaire Lee Cooperman’s 5 favorite stocks heading into 2021. For a comprehensive list please see How Billionaire Lee Cooperman Is Preparing For Massive Inflation.

5. Trinity Industries, Inc. (NYSE:TRN)

The rail transportation products and services provider Trinity Industries, Inc. (NYSE: TRN) is one of the billionaire Lee Cooperman’s favorite stocks heading into 2021. The legendary investor first initiated a position in Trinity in 2017 and the firm has raised its stake by 6% in the latest quarter. It is the fifth-largest stock holding of the Omega family office portfolio.

Shares of Trinity Industries rallied almost 16% in 2020. In addition, the company also offers a hefty dividend yield of 3.16%. It has raised dividends in the past ten consecutive years, while the average dividend growth rate stood around 20% in the past five years. Diamond Hill talked about TRN in June and said the following:

“We closed our position in transportation products and services provider Trinity Industries, Inc. as the shares approached our estimate of intrinsic value.”

TRN shares appreciated by 30% since then.

4. Cigna Corporation (NYSE:CI)

The health insurance provider Cigna Corporation (NYSE: CI) is the fourth largest stock holding of Omega Advisors family office portfolio. Although Omega sold 22% of the stake in the latest quarter, the health insurance provider still accounts for 7.08% of the overall portfolio.

Hedge funds are less optimistic about Cigna’s performance. The number of bullish hedge fund bets retreated by 10 in recent months. Cigna Corporation was in 62 hedge funds’ portfolios at the end of September relative to an all-time high of 76.

Meanwhile, Avenir Capital looks bullish on the future fundamentals of the healthcare insurance company. Here is what Avenir Capital stated about Cigna in a shareholder letter:

“While we generally don’t comment on current quarter events in these letters, given the timing and significance of the U.S. election, it is, perhaps, worth pointing out that Cigna’s share price jumped 15% the day after the election. We think the probability of dramatically unfavourable policy outcomes is low and prefer to hold this proven compounder through the volatility.”

3. Alphabet Inc (NASDAQ:GOOGL)

Alphabet Inc (NASDAQ: AAPL) is the third-largest stock holding of Omega Advisors. It is one of the billionaire Lee Cooperman’s favorite stocks heading into 2021 because the legendary investor bought 60,000 shares of Alphabet in the latest quarter.

Shares of Alphabet soared almost 29% in the last twelve months, extending the five years gains to 126%. Although the internet company underperformed this year compared to other FAANG stocks, the market analysts expect upside ahead amid prospects for recovery in the pandemic hit businesses – which will enhance its ads revenues. The company’s ad revenue from the traveling and tourism industries fell sharply this year.

Here is what Baron Opportunity Fund said recently about GOOGL:

“Considering solid Fund inflows, we added to long-term holding Alphabet Inc. to maintain its weighting in the portfolio. Alphabet is the parent company of Google, the world’s largest search and online advertising company. We increased our position in Alphabet this quarter as a protracted COVID-19-related recovery in travel and brand advertising presented an attractive buying opportunity. We are encouraged by improving trends in both search and YouTube, driven by durable tailwinds to e-commerce and local advertising, as well as the continued shift of video advertising dollars away from linear television as consumers increasingly cut the cable TV cord. We believe Google is becoming slightly more disciplined in capital allocation than it has been historically. Lastly, Google Cloud, which this quarter achieved a $12 billion revenue run rate under the leadership of Thomas Kurian, is having increasing success competing with larger vendors, due to its strengths in security, open-source, and data analytics.”

2. Mr. Cooper Group Inc. (NASDAQ:COOP)

The billionaire investor has raised its stake by 12% in Mr. Cooper Group Inc. (NASDAQ: COOP) in the third quarter. It is the second-largest stock holding of Omega Advisors family office portfolio, accounting for 10.21% of the overall portfolio.

Shares of Mr. Cooper Group soared 145% in the last twelve months. Mr. Cooper was in 24 hedge funds’ portfolios at the end of June compared to an all-time high of 34. Diamond Hill Capital has been showing concerns over the mortgage industry. Here’s what Diamond Hill Capital stated in a shareholders letter:

“Mortgage servicing company Mr. Cooper Group, Inc. underperformed amid fears over advance payments mortgage servicers are required to make to bondholders in the event of missed payments from borrowers. Investors worry that Federal programs encouraging borrowers impacted by the virus to delay mortgage payments will overwhelm the servicing industry’s ability to make payments to bondholders.”

1. Fiserv, Inc. (NASDAQ:FISV)

Financial services technology company Fiserv, Inc. (NASDAQ: FISV) is the largest stock holding of Omega Advisors family office portfolio. It is holding 1 million shares of Fiserv valued at $106 million, accounting for 10.44% of the overall portfolio.

Shares of Fiserv underperformed in 2020, but market analysts believe it is one of the best ways to play the secular shift toward electronic payments. The company has generated 21% revenue growth in the September quarter while the fintech company expects adjusted earnings per share to grow at a double-digit rate in 2020.  

Please also see Barry Rosenstein and Jana Partners: Top 10 Stock Picks and Billionaire Larry Robbins’ Top 10 Stock Picks