Its becoming an annual tradition. Every year it seems
multiple times, in some cases Leon Cooperman
takes the stage to discuss his best investment ideas. And much
like the plot in the Bill Murray movie Groundhog Day,
the themes of the Omega Advisors founders presentations
seem to repeat themselves time and again.
Cooperman, however, isnt cursed by Punxsutawney
Phils shadow to relive the same day over and over. Rather
the longtime hedge fund manager is stuck fortunately for
his investors in a perpetual loop of bullishness on
equities, particularly in the U.S.
The former Goldman Sachs Asset Management CEO started Omega
in 1991. When this year began it had $7.3 billion in assets
under management, good enough for No. 73 in the Hedge Fund 100 ranking
of the worlds biggest hedge fund firms compiled by
Institutional Investors Alpha. The firms
flagship fund returned between 27 and 28 percent last year and
posted first quarter gains of 9 percent to
start 2013 putting it among the best-performing hedge
Cooperman appeared at the first two Delivering Alpha
conferences the daylong, widely attended assembly of
whos who in finance and investing. Co-hosted by
Institutional Investor and CNBC, this years edition of
the fund-fest will take place on Wednesday, July 17, at the
Pierre Hotel in New York City.
As he did in 2011, Cooperman touted stocks as the best
house in the financial asset neighborhood while on the
podium last year, adding it was still unclear if its a
good or bad neighborhood. He cited four factors for his
moderately constructive view of the U.S. economy.
First was the belief that no recession was on the horizon; next
the extraordinarily accommodative monetary policy
the Federal Reserve was pushing; third, the reasonable
valuation of companies; and last, the increased willingness of
investors to take risks.
And, as he did during the first Delivering Alpha conference,
Cooperman last year laid out ten hot stocks he believed were
primed to move upward. Once again he offered the crowd a wide
range of sectors, from technology and financial services to
energy, health care and media. Heres how Coopermans
top stock picks from Delivering Alpha 2012 did over the past
AIA Group (12.99 Hong Kong) American
International Groups Asian spin-off was the lone non-U.S.
equity. The Hong Kongbased insurance company has thrived since breaking from AIG in a 2010
IPO. AIA purchased INGs Malaysian insurance unit in
October for $1.73 billion, securing the top insurance spot in
that market and helping propel Coopermans pick to a 18
percent gain during the past year.
Actavis (ACT) Known as Watson
Pharmaceuticals when Cooperman ballyhooed the stock, the
Parsippany, New Jerseybased drug maker changed its name
effective January following its November 2012 acquisition of
Switzerlands Actavis Group. The merger created the
worlds third-largest global generics company. Since July
2012, the share price has risen over 60 percent, to $124. In
May of this year, Actavis announced an agreement to purchase
rival producer Warner Chilcott in a $8.5 billion all-stock
Capital One Financial (COF) Many large
financial services companies have done well over the past year.
Visa is up almost 50 percent since Coopermans
presentation, while MasterCard and American Express are up 34
percent and 30 percent, respectively. Capital One posted a
steady share price increase as well, though not as impressive
as its fellow sector cohorts. The McLean, Virginiabased
holding company was up more than 14 percent.
Express Scripts (ESRX) Shares of
pharmacy benefits manager Express Scripts took a hit in
November after reining in analyst 2013 expectations during an
earnings call but have since rebounded. The stock is up more
than 10 percent since last July. The Cool Valley, Missouri,
companys $29 billion acquisition of rival Medco in April
2012 made Express Scripts the U.S.s largest pharmacy
Gannett Co. (GCI) Who says print is
dead? The owner of USA Today and other newspapers has
seen its shares soar 70 percent since Cooperman touted it at
Delivering Alpha. In October, Gannett acquired Rovion, a
Bostonbased advertisement agency, to aid in its digital
expansion. Gannett is the U.S.s largest publisher of
newspapers by total daily circulation.
Halliburton (HAL) Oilfield services
company Halliburton trended downward from mid-2011 to mid-2012
prior to Coopermans prescient call. Since then the
company once run by former vice president Dick Cheney has seen
its share price rise more than 45 percent. The stock was a
popular pick for many hedge fund managers in 2012.
Kinder Morgan (KMI) While the share
price for energy transportation giant Kinder Morgan rose a
somewhat modest 10 percent during the past year, its P/E ratio
has topped 48, implying investor confidence in future growth.
The Houston company recently proposed a $5.4 billion expansion
of its pipeline in the Alberta province of Canada.
MetLife (MET) Well-known for its
sponsored blimp coverage of sporting events and use of Charles
Schultzes Peanuts characters in advertisements, New
Yorkbased insurance giant MetLife saw a healthy increase
of 50 percent in its share price during the past year. The U.S.
economy continues to recover, albeit slowly, which bodes well
for MetLife, which draws three-quarters of its customers from
Qualcomm (QCOM) Few companies have
benefited more from the global explosion in smartphone sales
than Qualcomm. The San Diegobased chipmaker has a 43
percent revenue share in the smartphone processor market, more
than both Apple and Samsung, according to research firm
Strategy Analytics. Qualcomm, which has a market cap of more
than $100 billion, recently made a $120 million investment in
Japanese electronics company Sharp. Since last July its share
price has risen 15 percent.
Western Union Co. (WU) You cant
win em all, right? Maybe you can, at least if youre
Lee Cooperman. Since that hot summer day at the Pierre Hotel
back on July 18 of last year, Western Unions stock price
rose, albeit just 2.4 percent, to $16.87. The company posted
revenue of $1.33 billion for the first quarter of this year,
down about 5 percent from the same period in 2012.
When all is said and done, a portfolio comprising an even
distribution of Coopermans ten stocks would have returned
nearly 31 percent from July 12, 2012, the date the longtime
hedge fund manager used for his share valuations at last
years conference, through the close of the market on June
26. The S&P 500 rose 20 percent over this same period. Four
of Coopermans picks Gannett, Halliburton, MetLife
and Actavis obliterated this figure, all posting over 45
percent gains. Five more AIA Group, Capital One, Express
Scripts, Kinder Morgan and Qualcomm finished with gains
between 10 and 20 percent.
Beating the market is no easy task. Cooperman has made a
handsome living doing just that. His ideas at Delivering Alpha
2012 were either massive winners, so far, or slight
underperformers relative to the S&P. Of course, Cooperman
didnt leave the stage without his classic assault on
investing in government bonds what he equates to
walking in front of a steam roller and picking up
Cooperman will be back at this years Delivering Alpha
Conference. Join us on July 17 at the Pierre Hotel in New York
City, or here online at institutionalinvestor.com for in-depth
Capital One Financial
Western Union Co.