Billionaire Leon Cooperman’s Best Ideas to Turn the Ship Around

A former CEO of Goldman Sachs Asset Management, Leon Cooperman left the banking giant in 1991 to start his own investment firm, Omega Advisors. With $5.4 billion in assets under management, Cooperman oversees an equity portfolio worth $4.58 billion as of the end of 2015. Although those billions are spread among a large number of sectors, Cooperman seems to have a preference for financial and technology stocks, which together account for 40% of his portfolio. Insider Monkey calculates a fund’s long stock picking skill by looking at the weighted average returns of long positions in companies with a market cap that exceeds $1 billion, based on the size of those positions at the beginning of each quarter. Using that metric, Omega’s qualifying long stock picks registered a loss of 10.8% in 2015, similar to James Dinan‘s York Capital Management, whose picks suffered an 11% loss. George Soros‘ Soros Fund Management, which holds an equity portfolio with roughly the same market value as Cooperman’s, managed a smaller loss with its qualifying stock picks, in the region of 3% in 2015. In this article, we’ll find out how Leon Cooperman hopes to get back to his traditionally winning ways by analyzing his top-five equity positions heading into 2016.

We determine hedge fund sentiment by analyzing the equity portfolios of some of the best-performing hedge funds and institutional investors. Through extensive research, we have determined that the due diligence that these investors employ, as well as their long-term focus makes them the perfect targets to emulate (see the details here).

Kicking off the top-5 is AerCap Holdings N.V. (NYSE:AER), which was Omega’s third-largest investment at the end of the third quarter. Cooperman sold exactly 25,000 AerCap shares during the fourth quarter, leaving him with 5.59 million shares valued at $241 million. The small sale was likely just some profit taking, as AerCap’s shares enjoyed a strong fourth quarter, despite the broader market downturn. AerCap Holdings N.V. (NYSE:AER) is set to release its fourth quarter results on February 23 and analysts are looking for $1.27 billion in revenue and earnings of $1.47 per share. Billionaire Ken Griffin also reduced his investment in AerCap Holdings N.V. (NYSE:AER), though to a much greater extent, having dumped 45% of his holding during the quarter. At the end of December, Griffin’s Citadel Investment Group held 3.05 million AerCap shares worth $132 million.

First Data Corp (NYSE:FDC) is a new addition to Omega’s equity portfolio, one which made it into the top-5 holdings. Leon Cooperman acquired roughly 15.4 million shares during the fourth quarter, giving him a position worth $242 million at the end of December. A processor of credit-card and debit-card transactions, First Data Corp (NYSE:FDC) went public in October 2015 and the stock quickly turned south amid the general market selloff, and currently trades down by approximately 40% from its IPO price. Last week, First Data Corp (NYSE:FDC) released its fourth quarter earnings report, posting better-than-expected figures. Revenue came in at $2.96 billion, greatly surpassing analysts’ estimates of $1.85 billion, while adjusted earnings of $0.32 per share also easily topped expectations of $0.25 per share.

Leon Cooperman decided to trim his stake in Allergan plc Ordinary Shares (NYSE:AGN), with the Irish giant now on course to merge with Pfizer Inc. (NYSE:PFE). According to its latest 13F filing, Omega’s position was reduced by 3% to 781,780 shares valued at approximately $244 million. At the end of the third quarter, Allergan plc Ordinary Shares (NYSE:AGN) was the most popular stock among the hedge funds we track, having attracted the attention of 151 elite fund managers. Billionaire Dan Loeb is also betting on Allergan plc Ordinary Shares (NYSE:AGN), having increased his stake by 47% over the fourth quarter to amass 5.4 million shares.

Cooperman is bullish on American International Group Inc (NYSE:AIG), having increased his investment in the insurance giant by 21% during the quarter, making it his second-biggest bet. Omega now holds 4.09 million shares of AIG, worth $253 million at the end of 2015. John Paulson and Carl Icahn have recently teamed up to try and force the breakup of American International Group Inc (NYSE:AIG) into three separate entities, arguing that the move would rid the group of the “systemically important financial institution” tag, which implies tougher regulatory requirements and costs. As activists were gearing up for a full scale war, the management of American International Group Inc (NYSE:AIG) agreed to offer them board seats as a token of faith and to engage amiably. They have not, however, come to an agreement, as Paulson and Icahn continue to believe that breaking the company up is the way forward, while management appears to believe otherwise.

Leon Cooperman is still betting big on Alphabet Inc (NASDAQ:GOOGL), his top pick heading into 2016, although he decided to cut his position in the stock by 11% over the fourth quarter. In its latest 13F filing, Omega indicated ownership of 427,619 class A shares of the tech giant, worth in excess of $332 million. Alphabet Inc (NASDAQ:GOOGL) was a solid performer during 2015, ending the year up by 46%. Among its moves during the year, Google decided to reorganize itself under the Alphabet umbrella, to provide investors with greater transparency in regards to its core businesses and other endeavors. At the beginning of February the company released its first quarterly financial report under that new structure, reporting a 14% increase in revenue from its core businesses, to $74.54 billion. The other group, which includes projects like self-driving cars, reported an operating loss of $3.1 billion, double the figure reported a year earlier. Still, Alphabet Inc (NASDAQ:GOOGL) managed to beat analysts’ estimates for the fourth quarter, posting adjusted earnings of $8.67 per share on the back of $21.33 billion in revenue.

Disclosure: None