Before becoming chairman of Omega, Cooperman worked as chief executive officer of Goldman Sachs Asset Management for nearly 20 years. In 1991 he left the firm and founded Omega.
Cooperman is a savvy investor. However, his last comments at the Value Investing Congress in New York surprised everyone.
As a result of the European crisis he said investors should not focus on Treasuries due to the drop of yields to record lows. Many of his colleagues are grabbing them desperately, despite the biggest yield compression that asset had since 2008.
He suggested buying shares in a few companies, particularly Apple, Boston Scientific Corp., Qualcomm Inc. and SLM Corp., among others.
But apart from his suggestion, it is worth mentioning that Leon Cooperman has made very good deals in selecting a portfolio of high-yielding stocks, which are the following:
THL Credit Advisors LLC (TCRD): THL Credit Advisors LLC is a company that provides junior capital to private and public middle market companies operating in different industries. It has a particular target: companies requiring capital for growth, acquisition, recapitalization and change of control. It primarily invests in privately negotiated subordinated debt securities that sometimes include warrants.
Its objective is to generate income and capital appreciation from the investments.
THL is in charge of managing the company’s investment activities and is also in charge of looking for potential investments, carrying out research on investments, analyzing the different opportunities, structuring them and monitoring their course.
He kept the position UNCHANGED.
KKR Financial (KFN): KFN is mostly made up of corporate loans and collateralized loan obligations that provide high yields.
KFN is an interesting move. Last quarter’s results show it. Its weighted average estimated fair value of its portfolio reached 96.5% after a 2.3% increase.
The portfolio is expected to remain stable as interest rates stay low, as well as LIBOR, and since the beginning of 2011 the firm has maintained the $9 mark.
This is an investment that enables every interested party to sit and wait. KFN is able to offer a 6.5% yield on dividends — yield that can be translated into a solid income.
Similar to TRCD, Cooperman kept the position UNCHANGED.
Dish Network Corp. (DISH): Dish Network Corp. is DirecTV's main competitor. Despite DirecTV’s presence in the market, Dish is making big efforts. It is generating better results from its main divisions and restructuring its operations. The stock is trading at attractive multiples. In fact, it has one of the lowest P/Es in the cable industry, which is 7.42.
In terms of dividends, in November, it has been able to pay out a huge dividend of 8.50%.
Apart from this last quarter’s results, Dish is showing that it is willing to continue growing. Actually, it purchased Blockbuster’s assets. It has a restructuring plan in mind.
Although this acquisition has done away with equity, Dish still has $1.4 billion to base its operations, which are sufficient until this restructuring plan starts to yield.
Linn Energy LLC (LINE): Linn Energy LLC is an independent oil and natural gas company. It develops and acquires oil and gas properties in the United States.
It is positioned within the top 20 independent oil and gas companies.
It has been doing very well lately. With a market cap of $6.53 billion and an enterprise value of $9.66 billion, it has proved reserves of 2,597 billion cubic feet of oil and gas and natural gas liquids. It has also operated 7,097 of gross productive wells.
Expectations for the year to come are also great. Management is foreseeing 30% growth. This portrays the company’s interest in delivering value to its shareholders.
Furthermore, many unit holders and insiders have been purchasing shares: Director T. Jacobs and Officer Mark Ellis, among others. The average purchase price per share was $32, approximately.
Transocean Ltd. (RIG): Transocean Ltd. is one of the leading offshore drilling companies across the world. The company has done well for some years, with a market cap of $15.31 billion and a stock trading between $43.15 and $85.98.
Unfortunately, things have been getting worse for RIG. In 2010 income dropped by 231%. The drop in earnings was mainly due to the explosion of Deepwater Horizon, its drilling rig in the Mexican Gulf, the legal hurdles it had to face after this event and the global economic crisis. RIG reported a $77 million loss at early 2011.
Despite this difficult situation, management is sure that the company will be able to overcome. Over time, with the restoring and refitting activities and the operation of its fleet, RIG will be able to improve. The oil price will move back to over $100 per barrel, fully benefiting the company.
Furthermore, RIG has been paying a $3.16 dividend and has reported 6.3% in yields.
A patient investor will soon be rewarded and the stock price will rebound.
What do you think about these choices? Would you be long for any of them?