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James Li
James Li
Articles (1486)  | Author's Website |

Leon Cooperman's Top 5 Trades of the 3rd Quarter

The Omega Family Office releases portfolio as Dow sets new record close

Leon Cooperman (Trades, Portfolio), founder and chairman of the Omega Advisors Family Office, disclosed that its top five trades for the third quarter included new holdings in Alphabet Inc. (NASDAQ:GOOG)(NASDAQ:GOOGL) and Athene Holding Ltd. (NYSE:ATH) and sells in JPMorgan Chase & Co. (NYSE:JPM), Centene Corp. (NYSE:CNC) and Cigna Corp. (NYSE:CI).

The chairman of the New York-based firm combines his macro views and fundamental valuation in his investing strategy. Cooperman converted his hedge fund into a family office in 2018, citing in a letter that he did not wish to chase the Standard & Poor's 500 Index for the rest of his life.

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Guru releases portfolio as Dow sets new record close

Cooperman warned in a Nov. 6 CNBC interview that the U.S. stock market has "too much debt" in the economy and that someone has to pay the debt "when the party is over." While the guru believes that stocks are "right now adequately priced," an investor who purchased into the S&P 500 at 22 times earnings or more may have a near-zero return over the next five years.

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On Monday, the Dow Jones Industrial Average closed at a new record of 29,952.22, up 472.41 points from last Friday's close of 29,479.81 on the heels of biotech company Moderna Inc. (NASDAQ:MRNA) announcing that its Covid-19 vaccine candidate prevented, with a 94% effective rate, the virus in trial patients. The announcement follows Pfizer Inc. (NYSE:PFE) and BioNTech SE's (BNTX) announcement last week that their vaccine prevented the virus with a 90% effective rate.

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As of third quarter-end, Omega's $1.017 billion equity portfolio contains 41 stocks, with seven new holdings and a turnover ratio of 21.37%. The top three sectors in terms of portfolio weight are financial services, technology and communication services, with weights of 23.30%, 17.06% and 11.45%.

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Alphabet

Cooperman purchased 60,000 Class A shares of Alphabet, the same number of shares that he sold during the second quarter. The shares, which received an 8.65% equity portfolio weight, averaged $1,523.87 during the third quarter.

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GuruFocus ranks the Mountain View, California-based online media giant's financial strength 8 out of 10 on several positive investing signs, which include a strong Altman Z-score of 10 and an interest coverage ratio in the triple digits and that outperforms over 70% of global competitors.

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Other gurus with holdings in Google's Class A shares include Ken Fisher (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

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Athene

Cooperman purchased 981,606 shares of Athene, giving the position 3.29% equity portfolio weight. Shares averaged $34.42 during the third quarter.

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Athene issues, reinsures and acquires retirement savings products for individuals and institutions. GuruFocus ranks the company's financial strength 5 out of 10: The company has a weak Piotroski F-score of 3 despite cash-to-debt and debt-to-equity ratios outperforming over 60% of global competitors.

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JPMorgan Chase

Cooperman sold 310,000 shares of JPMorgan Chase, trimming the equity portfolio 3.34%. Shares averaged $98.20 during the third quarter.

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GuruFocus ranks the New York-based bank's financial strength 3 out of 10 on the back of equity-to-asset and debt-to-equity ratios underperforming over 63% of global competitors, suggesting high financial leverage compared to stocks from other sectors and regions.

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Gurus with large holdings in JPMorgan Chase include Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) and PRIMECAP Management (Trades, Portfolio).

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Centene

Cooperman sold 400,000 shares of Centene, trimming the equity portfolio 2.91%. Shares averaged $62.15 during the third quarter; based on GuruFocus estimates, the guru gained approximately 4.46% on the stock since the first quarter of 2019.

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GuruFocus ranks the St. Louis-based health care company's profitability 7 out of 10 on the back of a three-year business predictability rank and a three-year revenue growth rate that outperforms over 72% of global competitors.

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Cigna

Cooperman sold 120,000 shares of Cigna, reducing the position 22.02% and the equity portfolio 2.58%. Shares averaged $176.27 during the third quarter.

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GuruFocus ranks the Bloomfield, Connecticut-based health care company's financial strength 5 out of 10: Although the company has a high Piotroski F-score of 7, debt ratios are underperforming over 70% of global competitors.

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Disclosure: No positions.

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About the author:

James Li
I am an editorial researcher at GuruFocus. I have a Master's in Finance from SMU, and I enjoy writing reports on financial trends and investor portfolios. Follow me on Twitter at @JamesLiGuru!

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