Billionaire Leon Cooperman grew up as the son of a plumber living in the South Bronx, then worked his way into Hunter College as a Xerox quality control engineer in the mid-60’s. Later, Cooperman went to Columbia Business School for an MBA.
After a 25-year career with Goldman Sachs, Cooperman founded Omega Advisors in 1991. Outlined below is some of the interesting takeaways from Omega’s recent buys and sells per its first quarter filing with the SEC (check all of Cooperman’s new picks).
Top pick
Holding strong as Cooperman’s top pick is Sprint Nextel Corporation (NYSE:S), making up 6.27% of his fund’s 13F portfolio. The big news of late for Sprint has been the battle between Softbank and Dish Network to see who will have control over the mobile company.
The Japanese cellphone company Softbank made a deal to to inject some $20 billion into Sprint for 70% of its shares. With this new capital, Sprint Nextel Corporation (NYSE:S) had hoped to purchase the remaining shares of Clearwire that it didn’t already own for $2.2 billion. However, in April Dish Network made a new proposal to acquire Sprint for $25.5 billion, outbidding the Softbank offer. Dish also proposed a deal to buy Clearwire for $3.30 per share.
Dumping healthcare
One of Cooperman’s notable sell-offs was Humana Inc (NYSE:HUM). Humana managed to post first quarter 2013 operating earnings of $407 million or $2.69 per share, surpassing consensus. However, total operating expenses have also been on the rise since 2009, rising 4.9% in 2009, 9.3% in 2010, 8.7% in 2011 and 7.6% in 2012.
The industry remains competitive, with a number of other companies offering similar insurance products and health/wellness services as Humana. Humana Inc (NYSE:HUM) also has a large portion of its revenue exposed to federal government health care coverage programs, including the Medicare, TRICARE and Medicaid programs. Thus, any cut in these programs or a change in healthcare funding could have a negative impact on Humana.
Big buys
Meanwhile, Cooperman was upping his stake in Chimera Investment Corporation (NYSE:CIM), Priceline.com Inc (NASDAQ:PCLN) and Eastman Chemical Company (NYSE:EMN).
Chimera was a 121% increase in shares owned from the previous quarter. Chimera Investment Corporation (NYSE:CIM) is a specialty finance company that invests in residential mortgage loans, residential mortgage-backed securities, and real estate-related securities. The REIT pays a very high 19.88% dividend yield.
Priceline.com Inc (NASDAQ:PCLN) saw Cooperman increase its shares owned by 73% during the first quarter. This online travel booking company is already up 29% year to date, but could have more room to go. For the second quarter, Priceline expects total gross bookings to grow by some 30% to 37% year-over-year.
Priceline is looking for longer-term growth via international expansion, with a focus on Asia and South America. Management believes China and other Asian countries are highly under-served and under-penetrated.
Priceline.com Inc (NASDAQ:PCLN) also has a very strong cash position, with cash and short-term investments of roughly $3.22 billion, compared to $2.5 billion in the previous quarter. Its debt to capital ratio is at a manageable 29%. I think Priceline can perform nicely on the back of a rebounding economy, which will spur travel bookings higher. Fellow billionaire Stephen Mandel is the largest shareholder in Priceline.com Inc (NASDAQ:PCLN), having a $1 billion position (check out Mandel’s newest picks).
Eastman Chemical Company (NYSE:EMN) saw Cooperman up its shares owned by 94% last quarter. Eastman manufactures and sells chemicals, plastics and fibers. The company has been working through various business restructuring initiatives, which includes selling off unprofitable units and closing businesses that could not be sold. Eastman closed its PET polymer operations in Cosoleacaque, Mexico and Zarate, Argentina.
The company’s first quarter 2013 earnings came in at $1.62 per share, well above year-ago EPS of $1.22. In the future, Eastman Chemical Company (NYSE:EMN) hopes to leverage its stronghold in key markets and large geographical presence to see growth. However, there appears to still be interim pressures for the company. Eastman lowered its full year 2013 EPS expectations from $6.40 to $6.30.
Bottom line
Billionaire Copperman’s Omega Advisors still loves Sprint Nextel Corporation (NYSE:S), and for good reason. The mobile company has seen Dish Network make an offer to buy up the company. Even without an acquisition by Dish, Sprint is well positioned to perform well over the long-term given its recent moves to better compete with AT&T and Verizon. I agree with Cooperman’s selloff of Humana Inc (NYSE:HUM), while also believing that Priceline.com Inc (NASDAQ:PCLN) could perform well. But I remain cautious on Eastman as the company looks to restructure.
The article Billionaire Leon Cooperman’s Shakeups originally appeared on Fool.com and is written by Marshall Hargrave.
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