Leon Cooperman is the founder and chair of Omega Advisors, a hedge fund. Before setting up the fund, Cooperman was the CEO and chairman of Goldman Sachs Asset Management.
Cooperman's strategy involves a macro view and fundamental valuation. He makes attempts to predict the market but also focuses in valuations.
At an interview he was asked for advice and he said: “I recently read a quote by a Mr. William Ward that hit me in a positive way and is to be used as a guide in how you conduct yourself:
Before you speak, listen.
Before you write, think.
Before you spend, earn.
Before you invest, investigate.
Before you criticize, wait.
Before you pray, forgive.
Before you quit, try.
Before you retire, save.
Before you die, give.”
By analyzing his portfolio, I found several picks that I am interested to research. They have something in common that I want to look for in a hedge fund portfolio: The stocks are cheaper than what the guru paid. In this case, I found five stocks of Leon Cooperman that match that criteria:
Research In Motion (RIMM, Financial): Cooperman initiated a position when RIMM traded above $20.
Research In Motion designs and markets wireless handsets, software and services. RIM's primary revenue driver is the sale of handsets to carriers worldwide that promote the company's BlackBerry line of devices.
Revenue from software licensing comes from corporate clients who include BlackBerry software into the enterprise.
It has been said that Amazon, Microsoft and Nokia have been interested in purchasing RIMM but no proposal has materialized.
Financially speaking the figures have shown that the share price is $15.5 per share, the book value achieved 19.45 and in general, the balance sheet looks strong. The company can take advantage from $1.4 billion in cash and investments with no debts.
It has been considered that the stock looks undervalued in the P/B value multiple.
Forest Oil Corp. (FST, Financial): Cooperman initiated a position when the stock traded in the low $20s.
FST is an independent oil and gas company. It engages in the acquisition, exploration, development and production of oil, natural gas and natural gas liquids primarily in North America.
Unfortunately, the debt to equity ratio is almost 160. On the positive side, earnings have been doubled.
FST has a market capitalization of $2.2B. P/E: 17.7, a forward P/E of 11.3 and a P/CF of 3.92.
E*Trade (ETFC, Financial): Cooperman bought the stock at an average price of $13.
E*Trade is an online discount brokerage and bank with headquarters in New York. It offers sweep, checking, and savings products to its brokerage clients.
Its balance sheet is recovering as delinquencies have dropped 10% and the provision expense has been reduced by 4.6%.
E*Trade is currently trading at $7.73 per share. It has a market cap of $2.25B and a P/E ratio of 17.56.
Transocean (RIG, Financial): Cooperman bought the stock at an average price of $61
Transocean is an offshore drilling company. Its fleet includes drill ships, semisubmersibles and jackups, operating in demanding environments such as Brazil, Nigeria and the North Sea.
Transocean is very well positioned to capitalize drilling tech breakthroughs and higher oil and gas prices.
Its dividends yield at 8.2%. Although it was trading very well, shares trade at $26. This means that they are undervalued.
Currently P/B is 0.6 and an average price targets around the $60-$65 mark based on estimated EV of $31.5 billion and estimated 2012 EBITDA of $3.9 billion.
Transocean will surely improve in the future thanks to its favorable valuation and strength.
Cablevision (CVC, Financial): Cooperman bought the stock at an average price of $23.5.
Cablevision is one of the largest multimedia companies in the United States. Its operations are divided into two distinct segments: a cable TV and high-speed data business and Newsday, a daily newspaper serving Long Island.
During the past years, CVC has been managed by Rutledge, who now left the firm. He was instrumental to the growth of the company and the strategic cleansing including the spin-offs of Madison Square Garden and Rainbow Media.
In terms of future expectations, the firm will trade at 5.2 times 2012 free cash flow. Based on the customer base and scale efficiencies that help the economic moat, the stock is undervalued.
Cooperman's strategy involves a macro view and fundamental valuation. He makes attempts to predict the market but also focuses in valuations.
At an interview he was asked for advice and he said: “I recently read a quote by a Mr. William Ward that hit me in a positive way and is to be used as a guide in how you conduct yourself:
Before you speak, listen.
Before you write, think.
Before you spend, earn.
Before you invest, investigate.
Before you criticize, wait.
Before you pray, forgive.
Before you quit, try.
Before you retire, save.
Before you die, give.”
By analyzing his portfolio, I found several picks that I am interested to research. They have something in common that I want to look for in a hedge fund portfolio: The stocks are cheaper than what the guru paid. In this case, I found five stocks of Leon Cooperman that match that criteria:
Research In Motion (RIMM, Financial): Cooperman initiated a position when RIMM traded above $20.
Research In Motion designs and markets wireless handsets, software and services. RIM's primary revenue driver is the sale of handsets to carriers worldwide that promote the company's BlackBerry line of devices.
Revenue from software licensing comes from corporate clients who include BlackBerry software into the enterprise.
It has been said that Amazon, Microsoft and Nokia have been interested in purchasing RIMM but no proposal has materialized.
Financially speaking the figures have shown that the share price is $15.5 per share, the book value achieved 19.45 and in general, the balance sheet looks strong. The company can take advantage from $1.4 billion in cash and investments with no debts.
It has been considered that the stock looks undervalued in the P/B value multiple.
Forest Oil Corp. (FST, Financial): Cooperman initiated a position when the stock traded in the low $20s.
FST is an independent oil and gas company. It engages in the acquisition, exploration, development and production of oil, natural gas and natural gas liquids primarily in North America.
Unfortunately, the debt to equity ratio is almost 160. On the positive side, earnings have been doubled.
FST has a market capitalization of $2.2B. P/E: 17.7, a forward P/E of 11.3 and a P/CF of 3.92.
E*Trade (ETFC, Financial): Cooperman bought the stock at an average price of $13.
E*Trade is an online discount brokerage and bank with headquarters in New York. It offers sweep, checking, and savings products to its brokerage clients.
Its balance sheet is recovering as delinquencies have dropped 10% and the provision expense has been reduced by 4.6%.
E*Trade is currently trading at $7.73 per share. It has a market cap of $2.25B and a P/E ratio of 17.56.
Transocean (RIG, Financial): Cooperman bought the stock at an average price of $61
Transocean is an offshore drilling company. Its fleet includes drill ships, semisubmersibles and jackups, operating in demanding environments such as Brazil, Nigeria and the North Sea.
Transocean is very well positioned to capitalize drilling tech breakthroughs and higher oil and gas prices.
Its dividends yield at 8.2%. Although it was trading very well, shares trade at $26. This means that they are undervalued.
Currently P/B is 0.6 and an average price targets around the $60-$65 mark based on estimated EV of $31.5 billion and estimated 2012 EBITDA of $3.9 billion.
Transocean will surely improve in the future thanks to its favorable valuation and strength.
Cablevision (CVC, Financial): Cooperman bought the stock at an average price of $23.5.
Cablevision is one of the largest multimedia companies in the United States. Its operations are divided into two distinct segments: a cable TV and high-speed data business and Newsday, a daily newspaper serving Long Island.
During the past years, CVC has been managed by Rutledge, who now left the firm. He was instrumental to the growth of the company and the strategic cleansing including the spin-offs of Madison Square Garden and Rainbow Media.
In terms of future expectations, the firm will trade at 5.2 times 2012 free cash flow. Based on the customer base and scale efficiencies that help the economic moat, the stock is undervalued.
