Leon Cooperman (Trades, Portfolio), founder of Omega Advisors, has released his first-quarter portfolio for 2020. Major trades include reducing his positions in Fiserv Inc. (FISV, Financial) and Alphabet Inc. (GOOGL, Financial), selling out of United Airline Holdings Inc. (UAL, Financial) and DuPont de Nemours Inc. (DD, Financial) and adding to his Ferro Corp. (FOE, Financial) holding.
Cooperman, who now heads a family office, combines his macro view and fundamental valuation in his investing strategy. He does try to predict the market direction, but pays close attention to valuations, too.
Portfolio overview
Cooperman's portoflio contains 43 stocks, with three new additions. It is valued at $775 million and has seen a turnover rate of 12%. Top holdings of the portfolio include Fiserv (12.63%), Cigna Corp. (CI, Financial) (12.45%), Alphabet Inc. (GOOGL, Financial) (8.99%), Trinity Industries Inc. (TRN, Financial) (5.87%) and Microsoft Corp (MSFT, Financial) (5%).
By weight, the top sectors of the portfolio include technology (17.63%), financial services (14.39%) and communication services (13.74%).
Fiserv
In the first quarter, Cooperman reduced his holding of Fiserv by selling 1.03 million shares. At an average price of $111.47 per share, this represented a 50.13% reduction in the holding. Overall, the trade had a -6.38% impact on the portfolio.
Fiserv is a global financial services provider. They offer their services to everything from banks and credit unions to leasing and finance companies worldwide. As of May 21, the stock was trading at $104.71 per share with a market cap of $70.50 billion. According to the Peter Lynch chart, the company is trading above its intrinsic value.
GuruFocus gives the comany a financial strength rating of 4 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 2 out of 10. Increased levels of debt and a declining operating margin have placed the company into the distress column with an Altman Z-Score of 1.6. A cash-to-debt ratio of 0.04 places the company lower than 96.64% of the industry.
Alphabet
The Guru also reduced his position in Alphabet with the sale of 49,000 shares. This represented a 44.95% reduction in shares at an average price of $1,3059.46 per share. Overall, the sale resulted in a -3.49% impact on the portfolio.
Alphabet, the parent copmany of Google, traded at $1401.86 on May 21, with a market cap of $961.18 billion. The Peter Lynch chart suggests the company is overvalued.
GuruFocus gives the company a financial strength rating of 9 out of 10, a profitability rank of 10 out of 10 and a valuation rank of 4 out of 10. A cash-to-debt ratio of 6.98 is higher than 56.24% of the industry. An operating margin of 22.2% and a net margin of 21.22% both outdo the industry by at least 80%.
United Airlines
Cooperman sold out of his position in United Airlines with the sale of 1.16 million shares. The shares were sold at an average price of $67.03 per share and the sale represented a -5.45% impact on the portfolio.
United Airlines is based in Illinois and has flight operations in major and small cities across the United States and the majority of the world. As of May 21, the stock was trading at $26.07 per share with a market cap of $7.48 billion. The Peter Lynch chart shows the stock trading below its intrinsic value.
GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 10 out of 10. A price-book ratio of 0.7 and a price-sales ratio of 0.15 place the company above 71.86% and 91.35% of the industry respectively. A cash-to-debt ratio of 0.22, which is lower than 54.19% of the transportation industry, and an Altman Z-Score of 1.04, showing distress, contribute to the low financial strength score.
DuPont de Nemours
Cooperman also sold out of DuPont de Nemours, liquidating his 792,735 shares at an average price of $49.25 per share. This represented a -2.71% impact on the overall portfolio.
Dupont de Nemours, commonly known as Dupont, was formed by the merger of Dow Chemical and DuPont in August 2017. Prior to spinning off separate companies, it was a top chemical company in terms of sales. As of May 21, the stock was trading at $49.61 per share with a market cap of $36.40 billion.
GuruFocus gives the company a profitablity ranking of 6 out of 10 and a valuation rank of 1 out of 10. A cash-to-debt ratio of 0.09 places the company lower than 87.13% of the industry and an Altman Z-Score of 0.87 suggests the potential for bankruptcy.
Ferro
Amidst many sales Cooperman also added to his holding of Ferro, purchasing an additional 2.27 million shares. This represented 245.5% growth in the holding at an average price of $12.81 per share. The purchase had a 2.74% impact on the portfolio.
Ferro is a major producer of functional coatings and color solutions. Their global operations cover a wide variety of applications. On May 21, the company was trading at $11.68 per share with a market cap of $971.29 million. The Peter Lynch chart suggests the stock is trading above its intrinsic value.
GuruFocus gives the company a financial strength rating of 4 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 2 out of 10. Revenue per share has declined according to a severe warning sign, but an operating margin of 10.39% places the company above 66.05% of the industry.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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