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Humble Beginnings, Leon Cooperman’s Top-Yield Stocks in Review

December 16, 2013 | About:
Sally Jones

Sally Jones

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The Omega Advisors portfolio, led by the legendary Leon Cooperman, shows a total of 74 stocks, 10 of them new, with a total value of $6.61 billion and a quarter-over-quarter turnover of 12%. Leon Cooperman is the founder and chairman of Omega Advisors, a hedge fund with approximately $10 billion under management as of November 2013. Prior to starting his own firm in 1991, Cooperman was the CEO and chairman of Goldman Sachs Asset Management. Cooperman was a graduate of Columbia Business School. After working at Goldman Sachs for 25 years, Guru Cooperman founded Omega Advisors with $450 million in capital.

Cooperman rose to his illustrious career and a personal net worth of $3 billion, as of September 2013, from humble beginnings in the Bronx. In Cooperman’s defense of capitalists, he openly described his early “everyman” challenges in a letter to President Obama in 2011:

“Just to be clear, while I have been richly rewarded by a life of hard work (and a great deal of luck), I was not to-the-manor-born. My father was a plumber who practiced his trade in the South Bronx after he and my mother emigrated from Poland. I was the first member of my family to earn a college degree. I benefited from both a good public education system (P.S. 75, Morris High School and Hunter College, all in the Bronx) and my parents' constant prodding. When I joined Goldman Sachs following graduation from Columbia University's business school, I had no money in the bank, a negative net worth, a National Defense Education Act student loan to repay, and a six-month-old child (not to mention his mother, my wife of now 47 years) to support. I had a successful, near-25-year run at Goldman, which I left 20 years ago to start a private investment firm. As a result of my good fortune, I have been able to give away to those less blessed far more than I have spent on myself and my family over a lifetime, and last year I subscribed to Warren Buffett's Giving Pledge to ensure that my money, properly stewarded, continues to do some good after I'm gone.” Read Cooperman’s the full letter.

Cooperman’s investment strategy combines a macro view and fundamental valuation. He tries to predict market direction but pays close attention to valuations, and he practices patience. Back in October, Cooperman told CNBC that the stock market was valued fairly but not a bargain any more. Looking to pay less for more, Cooperman and team are watching for attractive valuations in a fairly-valued market. His firm has started to look at red chip companies with a good valuation versus major companies.

Cooperman was voted the number one portfolio strategist for nine consecutive years in the Institutional Investor All-America Research Team survey. He was listed as one of the 40 Highest-Earning hedge fund managers by Forbes in 2013. He was also listed by Bloomberg Markets on the 50 Most Influential list, citing 50 individuals with "the ability to move markets or shape ideas and policies."

The stocks bought by Leon Cooperman averaged a 12-month return of 12.28%.

As of Sept. 30, 2013, the Cooperman portfolio is weighted with top sectors: financial services at 27.3%, energy at 21%, and technology at 9.6%.

Here’s an update on Cooperman’s three top-yield stocks that also turn out to be REITs, or real estate investment trusts. All trade and holding details are as of Sept. 30, 2013.

AG Mortgage Investment Trust Inc. (MITT), Yield: 19.50%

Weightings: 0.05%

Current Shares: 200,000

Value: $3,324,000

Down 36% over 12 months, AG Mortgage Investment Trust Inc., a diversified real estate investment trust, has a market cap of $436.7 million; its shares were traded at around $15.39 with a P/E ratio of 10.20.

The company is not currently rated for business predictability.

Guru Action: As of Sept. 30, 2013, Leon Cooperman reduced his position by 25.81%, selling 69,590 shares at an average price of $17.42 per share, taking a loss of 11.7%.

Over three quarters, Cooperman averaged a loss of 24% buying 269,590 shares at an average price of $20.31 per share. Selling, he also took a loss of 12% on 69,590 shares at an average price of $17.42 per share.

Tracking share price, revenue and net income:



Two Harbors Investment Corp. (TWO), Yield: 16.20%

Weightings: 0.015%

Current Shares: 100,000

Value: $971,000

Down 15% over 12 months, Two Harbors Investment Corp., a residential real estate investment trust, has a market cap of $3.3 billion; its shares were traded at around $9.05 with a P/E ratio of 5.60.

The company is not currently rated for business predictability.

Guru Action: In the second quarter of 2012, Cooperman made a new buy of 100,000 shares at an average price of $9.59 per share, taking a loss of 5.6%.

As of Sept. 30, 2013, he took a loss of 7.7% on his holding of 100,000 shares at an average price of $9.81 per share. Overall, he averaged a loss of 6% on 100,000 shares at an average price of $9.59 per share.

Tracking share price, revenue and net income:



Resource Capital Corporation (RSO), Yield: 13.80%

Weightings: 0.09%

Current Shares: 1,000,000

Value: $5,940,000

Down 1% over 12 months, Resource Capital Corporation, a retail real estate investment trust, has a market cap of $739.7 million; its shares were traded at around $5.79 with a P/E ratio of 12.00.

The company is not currently rated for business predictability.

Guru Action: As of Sept. 30, 2013, Cooperman’s holding of 1,000,000 shares took a loss of 5.7%, with shares at an average price of $6.14 per share. Overall, he averaged a gain of 5% on 1,000,000 shares at an average price of $5.53 per share.

Cooperman’s five-year history shows that he last sold out 1,797,033 shares at an average price of $4.10 in the third quarter of 2009 when he gained 41.2%.

Tracking share price, revenue and net income:



Here’s the complete portfolio of Leon Cooperman.



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About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.0/5 (2 votes)

Comments

JEANRSMITH1
JEANRSMITH1 - 4 months ago
I am small investor.At 93 yrs of age .I think hyouare too big for me. I invest in companies like WEN,RAD,DMND.usual purchase 200 shrs. This has been a HOBBY for me for 40 yrs.I guess you're out of my league. I am just interested in knowing if some of my choices are similar to yours.I trade up to BRKb whenever I make a good profit. He is far wiser then I.The shares I have accumulated over the years will be my bequest to my Great grand children. Thank you for your kindness. Jean Smith

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