We recently published a list of 10 Best Dividend Stocks to Buy According to Billionaire Leon Cooperman. Since Arbor Realty Trust Inc (NYSE:ABR) ranks 7th in the list, it deserves a deeper look.
Billionaire Leon Cooperman made headlines in April when he predicted during an interview with CNBC that the US is headed for a financial crisis. Cooperman, who calls himself a “capitalist with a heart,” said that the Federal Reserve kept interest rates near zero, but raised them dramatically in a period of 12 months. Still, the 81-year-old billionaire sees no signs that the economy is “restrictive,” as he pointed to stock market highs and speculation. The Omega Family Office chairman and CEO expects “one or two” rate cuts this year. He emphasized that the market remains overvalued.
This isn’t the first time Cooperman warned the market about recession. In February last year, the billionaire said that the market was headed for a recession, and noted that the S&P 500 high of about 4,800 recorded in 2022 could “stand for some time.” In July 2022, while talking to Bloomberg, Cooperman said that he was “shocked” that interest rates were so low.
“I am of the view that equities are the best house in the financial asset in the neighborhood, but I don’t like the neighborhood, for a lot of reasons.”
Cooperman in the Bloomberg interview in 2022 had categorically said that sooner or later the strong dollar, prices of oil and the Fed would “lead us into a recession.” He went on to add that recession would be a “2023 event” and predicted that the market would bottom somewhere near 35% to 45% below its peak of 4800.
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The billionaire had said that he would be “very surprised” if we were to see another bull market anytime soon, given his view that we’ve had one of the biggest bull runs driven by FAANG, SPACs, and speculation. The AI revolution that started in 2023 was indeed a shocker for Cooperman as his recession predictions were proven wrong.
For this article, we scanned billionaire Cooperman’s Q1’2024 portfolio and chose his top 10 dividend stock picks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Arbor Realty Trust Inc (NYSE:ABR)
Number of Hedge Fund Investors: 24
Billionaire Leon Cooperman’s Stake: $31,550,821
With an over 12% dividend yield and P/E ratio under 10, Arbor Realty Trust Inc (NYSE:ABR) is one of the best dividend stock picks of billionaire Leon Cooperman in 2024. Arbor Realty Trust Inc’s (NYSE:ABR) liquidity and strong position in the mortgage REIT industry makes it an attractive play. Its book value over the past five years has jumped 36% when compared to peers in the industry who have seen their book value decline by 18% on average in the same period.
The stock’s Price to Book value is 1.04, lower than its 5-year average of 1.252. Arbor Realty Trust Inc (NYSE:ABR) is undergoing difficult times amid rising rates and headwinds in the mortgage market, but the management expects improvements down the road. Here is what Arbor Realty Trust Inc’s (NYSE:ABR) management said during the latest earnings call:
“We had a tremendous amount of success in the first quarter, working through a substantial amount of our delinquencies and modifying these loans by getting bars to bring a significant amount of fresh equity to the table and recapitalizing their deals. As a result in the first quarter, we successfully modified 40 loans, total of $1.9 billion, which fresh capital being brought to the table in every one of these deals.
This includes cash to purchase the low interest rate caps, fund interest rate, renovation reserves, bring any past due loans current and pay down balances where appropriate. In fact bars objected approximately $45 million of new capital into these deals with $1.65 billion of these loans purchasing new interest rate caps. We have also been highly effective in refinancing deals for our agency business as well as leveraging our long-term standing relationships, many quality sponsors to step in and take over assets that are underperforming and assumed debt. This is a difficult and complicated work in an extremely challenging environment. And I can’t say enough about the efforts put forth by our entire organization successfully managing through this dislocation.
We’re very pleased with the success we have had to-date and expect to remain extremely busy over the next few months and steadfast now approach as we continue to manage through the back balance of this downturn. Clearly in this environment having adequate liquidity is paramount to our success. As a result, we have focused heavily on maintaining a very strong liquidity position. Currently we have approximately $1 billion of cash between $800 million of corporate cash and $600 million of cash in our CLOs that result in additional cash equivalent of approximately $150 million.”
Of the 919 hedge funds tracked by Insider Monkey, 24 hedge funds reported owning stakes in Arbor Realty Trust Inc (NYSE:ABR), up from 17 funds in the previous quarter.
Overall, Arbor Realty Trust Inc (NYSE:ABR) ranks 7th in Insider Monkey’s list of the 10 Best Dividend Stocks to Buy According to Billionaire Leon Cooperman. You can visit the 10 Best Dividend Stocks to Buy According to Billionaire Leon Cooperman to see the other Billionaire Leon Cooperman’s 2024 stocks that are on his radar. While we acknowledge the potential of Arbor Realty Trust Inc (NYSE:ABR), our conviction lies in the belief that 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 Arbor Realty Trust Inc (NYSE:ABR) 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.