In this article, we will look at the 4 stocks billionaire Leon Cooperman is talking about right now. If you want to skip reading about Leon Cooperman, his investment career, and his stock-picking strategy, you can go directly to Billionaire Leon Cooperman is Talking About These 2 Stocks.
Leon Cooperman’s Investment Career
Leon Cooperman is an American billionaire investor, financial analyst, and founder of Omega Advisors, a billion-dollar hedge fund based in New York. Mr. Cooperman is an MBA holder from Columbia Business School and is also a chartered financial analyst. Leon Cooperman began his investment career at the Wall Street giant, Goldman Sachs, where he catered to various roles including research partner, portfolio strategist, co-chairman, chairman, and CEO. Mr. Cooperman stayed at Goldman Sachs for 25 years, from 1967 to 1991, after which he resigned from his roles at the major bank and founded his hedge fund, Omega Advisors, in 1991. At Omega Advisors, Mr. Cooperman focused on investing in undervalued companies and used a long-short equity analysis strategy. In 2016, Leon Cooperman closed his hedge fund to outside money and converted it into a family office. Leon Cooperman is an investing legend and a self-made billionaire. As of 2022, Forbes estimates Mr. Cooperman’s real-time net worth to be roughly $2.5 billion.
Leon Cooperman’s Market Outlook
On September 20, Leon Cooperman appeared in an interview on CNBC’s Squawk Box, where the investing legend discussed his view of the current stock market situation, the Fed, and how he picks stocks. Here are some comments from Leon Cooperman about the current market situation and what he sees ahead:
“We’ve had fairly irresponsible fiscal and monetary policies. We have pulled demand forward, we have got to get our house back in order. There is an explosion of debt in the system, and that debt has to be serviced. We are probably facing an environment of continued high inflation, rising interest rates, and rising taxes. The market really isn’t cheap. I think I find a lot of things to do, it’s a very strange market. The indices themselves have no fascination for me, but I find a lot of individual stocks that are attractively priced. We’re engaged and we find things that make sense, but overall I am not expecting much in the market…”
What Leon Cooperman Looks for Before Buying a Stock
Though Leon Cooperman is “not expecting much in the market”, he still finds “individual stocks that are attractively priced”. Here is what the investing legend looks for in a company before buying the stock:
“I am looking for two-cycle tested companies that have been through a couple of recessions and did not get blown apart. I want to be paid to wait so I am looking for dividend income while I am holding a security. (I am looking for) companies that have the capacity and the willingness to buy back cheap stock… I don’t want them to tell me it’s cheap, I want them to act and buy back stock that’s undervalued. I want quality and reliable management. I want a discount to market valuation. I am generally avoiding bonds, I think no one, myself included and certainly Powell, knows how high rates have to go to stem this inflation…”
Leon Cooperman said that he is “avoiding bonds” because he has “better places to park his cash” and that he can find “better things in the stock market that make more sense than buying bonds”. The veteran investor also said that he is bullish on the energy sector and disclosed that energy stocks make up for over 20% of his hedge fund’s portfolio. Some of the top pure-play energy stocks that are surging in 2022 include Occidental Petroleum Corporation (NYSE:OXY), Chevron Corporation (NYSE:CVX), and Exxon Mobil Corporation (NYSE:XOM).
Our Methodology
We watched Leon Cooperman’s recent interview and noted the stocks he discussed. In addition to mentioning why Leon Cooperman likes these stocks, we have mentioned the hedge fund sentiment, analyst ratings, and top shareholders with each stock as well. We have ranked these stocks in increasing order of their popularity among hedge funds.
Billionaire Leon Cooperman is Talking About These 4 Stocks
4. Tourmaline Oil Corp. (OTC:TRMLF)
Number of Hedge Fund Holders: N/A
Tourmaline Oil Corp. (OTC:TRMLF) is an oil and natural gas company in Canada. The company explores, develops, and produces oil and natural gas. Leon Cooperman noted that Tourmaline Oil Corp. (OTC:TRMLF) is among the leading gas companies in Canada and is generating $20 per share in cash flows. Leon Cooperman sees Tourmaline Oil Corp. (OTC:TRMLF) achieving a share price of above $100, up roughly 56% from its current share price which sits at $56 as of September 22.
On July 27, Tourmaline Oil Corp. (OTC:TRMLF) released earnings for the second quarter of fiscal 2022. The company reported earnings per share of C$2.40 and generated sales of C$2.11 billion, up 129% year over year. As of September 22, Tourmaline Oil Corp. (OTC:TRMLF) has returned 69% to investors year to date.
Tourmaline Oil Corp. (OTC:TRMLF) fits Leon Cooperman’s criteria for buying a stock. The company is undervalued, cash-rich, and pays dividends. On September 2, Tourmaline Oil Corp. (OTC:TRMLF) declared a quarterly cash dividend of C$0.225 per share. The dividend is payable on September 29 to shareholders of record at the close of business on September 15. As of September 22, Tourmaline Oil Corp. (OTC:TRMLF) has a trailing twelve-month PE ratio of 10.03 and is offering a forward dividend yield of 1.21%, which the company supports with free cash flows of $2.2 billion.
Wall Street analysts are bullish on Tourmaline Oil Corp. (OTC:TRMLF). On August 1, Desjardins analyst Justin Bouchard raised his price target on Tourmaline Oil Corp. (OTC:TRMLF) to C$100 from C$91 and reiterated a Buy rating on the shares. On September 19, Scotiabank analyst Cameron Bean raised his price target on Tourmaline Oil Corp. (OTC:TRMLF) to C$116 from C$106 and maintained a buy-side Outperform rating on the shares.
Like Tourmaline Oil Corp. (OTC:TRMLF), Occidental Petroleum Corporation (NYSE:OXY), Chevron Corporation (NYSE:CVX), and Exxon Mobil Corporation (NYSE:XOM) are surging in 2022 and have gained more than 30% year to date.
3. Energy Transfer L.P. (NYSE:ET)
Number of Hedge Fund Holders: 36
Energy Transfer L.P. (NYSE:ET) is a leading American energy company that is involved in natural gas and propane pipeline transportation. Leon Cooperman likes Energy Transfer L.P. (NYSE:ET) because of the company’s leadership and noted that the company’s CEO, Kelcy Warren, “puts his own money on the table” and “is a big accumulator of his own stock”. Mr. Cooperman said that the company’s CEO owns roughly 6.5% of the company’s common shares, and the veteran investor sees the dividend for Energy Transfer L.P. (NYSE:ET) growing moving forward.
On July 18, Richard Brannon, director of Energy Transfer L.P. (NYSE:ET) disclosed the purchase of 0.13 million common units of the company’s stock at $9.69 per share. Mr. Brannon acquired these shares between July 14 and July 15 for a transaction of $1.3 million. On September 12, Kelcy Warren disclosed that he has purchased more than 2.42 million common shares of Energy Transfer L.P. (NYSE:ET) at $12.04 per share.
On August 3, Energy Transfer L.P. (NYSE:ET) announced earnings for the fiscal second quarter of 2022. The company reported earnings per share of $0.39 and outperformed Wall Street estimates by $0.01. The company reported a revenue of $25.95 billion, up 71.8% year over year, and beat expectations by $5.6 billion. As of September 22, the stock has gained 32.7% year to date.
Wall Street analysts are bullish on Energy Transfer L.P. (NYSE:ET). On August 16, Barclays analyst Theresa Chen raised her price target on Energy Transfer L.P. (NYSE:ET) to $14 from $13 and maintained a buy-side Overweight rating on the shares. The analyst sees “unique tailwinds” in North American midstream and refining.
On August 24, Energy Transfer L.P. (NYSE:ET) announced that it has signed a 20-year LNG Sale and Purchase Agreement with Shell plc (NYSE:SHEL) under which it will supply Shell plc (NYSE:SHEL) with 2.1 million tonnes of LNG per year. The first LNG deliveries to Shell’s (NYSE:SHEL) Lake Charles LNG project are expected to begin in 2026.
Energy Transfer L.P. (NYSE:ET) is trading at a discount to market valuation and is offering a strong dividend payout. As of September 22, the stock is trading at a trailing twelve-month PE multiple of 9x and is offering a forward dividend yield of 7.71%, which the company backs with free cash flows of $5.87 billion.
Energy Transfer L.P. (NYSE:ET) is an undervalued, cash-rich energy stock that awards investors with strong dividend payouts. Other undervalued dividend-paying energy stocks include Occidental Petroleum Corporation (NYSE:OXY), Chevron Corporation (NYSE:CVX), and Exxon Mobil Corporation (NYSE:XOM).
Hedge funds are initiating positions in Energy Transfer L.P. (NYSE:ET). At the end of the second quarter of 2022, 36 hedge funds were long Energy Transfer L.P. (NYSE:ET) and held stakes worth $598.5 million in the company. This is compared to 31 positions in the previous quarter with stakes worth $699.4 million.
As of June 30, Abrams Capital Management owns roughly 22 million shares of Energy Transfer L.P. (NYSE:ET) and is the largest shareholder in the company. The fund’s stakes are valued at $220.8 million and the investment covers 5.93% of David Abrams’ 13F portfolio.
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Disclosure. None. Billionaire Leon Cooperman is Talking About These 4 Stocks is originally published on Insider Monkey.
