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 funds.
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 year:
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 deal.
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 benefits manager.
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 North America.
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 dimes.
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 coverage.
|Capital One Financial
|Western Union Co.