A value investor legend along the names like Warren Buffett and Seth Klarman and his four-decade-long career is marked by success. Since 1991 and the inception of his Omega Investments hedge fund, it has managed to generate 12.5% annual returns. In 2018 he converted the hedge fund into a family office. The Leon Cooperman Portfolio is valued at $2.1 billion and is divided among 50 holdings.
The largest holding, weighing almost 10% of the portfolio is Mr. Cooper Group (NASDAQ:COOP). It is followed by Energy Transfer LP (NYSE:ET) and Apollo Global Management (NYSE:APO).
Recently he significantly increased his stake in Fidelis Insurance Holdings, raising its weight to 1.19% of the portfolio. Major trimmings include sales in the Citigroup, Ellington Financial, and Pioneer Natural Resources holdings. Stay with us while we take a journey through a long and productive Leon Cooperman’s career.
Key Takeaways
- Cooperman started his investing career in 1967 working in the investment research department.
- After a 24-year-long career at Goldman Sachs, he founded his hedge fund Omega Advisors in 1991.
- The fund almost always outperformed the S&P 500 Index reaching an average annual gain of 12.5%.
- In 2018 Cooperman transformed the fund into a family office citing his age and the lack of interest in chasing the S&P 500 index year after year.
- The performance of the family office is also strong, reaching 55% compounded returns in the last three years.
Key Holdings
Mr. Cooper Group (NASDAQ:COOP) with 9.46% of the portfolio
With 3 million shares valued at $198 million, Mr. Cooper Group sits in first place in Cooperman’s portfolio. He started buying their stocks in 2018 soon after switching to a family office. Since Q4 2020 Cooperman has been slowly reducing this holding. From a maximum of 5 million stocks, they trimmed it to its current state. What is also important to note is that since Cooperman has been selling their stocks, the price went up from $25 to $59. This is a major win for Cooperman since the price gained a value of 587% in comparison to an average buy price.
Energy Transfer LP (NYSE:ET) with 7.92% of the portfolio
Energy transfer has been a part of Cooperman’s portfolio since Q2 2017 when he bought 390 thousand shares at the price of $17.80. The price fell below the $8 mark in 2020, however, he continued increasing this holding. The price never went back to $17.80, but Cooperman increased his stake to 12.06 million shares. The value of the holding is at $166 million, while the average buy price of their stock is at $11.55.
Apollo Global Management (NYSE:APO) with 7.21% of the portfolio
A holding dating back to Q1 2022 saw solid returns. The average buying price that Cooperman went with is $67 while its current price is 66% higher. The portfolio consists of 1.63 million stocks valued at $151 million. The last trade in this holding happened a year ago when Cooperman sold 210 thousand stocks.
Lithia Motors Inc (NYSE:LAD) with 6.52% of the portfolio
Lithia Motors is a relatively new holding in Cooperman’s portfolio which he first bought in Q2 2022. The first trade was $361 and since then the price has fallen to $274. He owns 516 thousand shares with a value of $137 million. This investment is yet to prove its true value because for now, it didn’t generate any major winnings. Copperman was buying their stock at an average of $273 while its current price is $275.
Willscot Mobile Mini Holdings Corp (NASDAQ:WSC) with 6.33% of the portfolio
Cooperman started investing in WSC holding in Q4 2021 and since then he only increased his stake. In Q4 2023 he bought additional 260 thousand stocks at $40. The value of the holding increased to $132 million. However, since February 2024 the stock value has been in decline, going from $52 to $39. Overall Cooperman’s buying price of this stock was $32.9 so he is still in the plus.
Vertiv Holdings Inc (NYSE:VRT) with 5.37% of the portfolio
The peak of investing in Vertiv was in Q1 2023 when Omega owned 3.12 million stock. Since then they trimmed this holding to 2.35 million stocks valued at $112 million. This investment proved to be a great pick when comparing an average buying price to current value. Cooperman on average paid for the stock just $15.82 while its price rose to $95.4 meaning that the actual value of the price is 500% higher than average.
Devon Energy Corp (NYSE:DVN) with 4.74% of the portfolio
A total of 3.12 million Devon stocks Cooperman bought in Q 2021 at a great price of $20. Ever since the stock price rose to a maximum of $68 by the end of 2022. By then he already sold about 850 thousand stocks and had continued to trim this holding. Currently, he owns 2.2 million stocks valued at $99.5 million. This proved to be another well-timed investment since the difference between an average buying price and the current price is 166% in favor of the latter.
Microsoft (NASDAQ:MSFT) with 4.40% of the portfolio
Microsoft is a long-term investment that Cooperman made in 2010. After an exit in 2011, he didn’t trade them until late 2015. Since then Microsoft has been an important part of his portfolio. The last activity was seen in Q4 2018 when Cooperman trimmed this holding to 245 thousand stocks. Today, they are valued at $92 million. Since the average buying price that Cooperman invested in Microsoft was just $109 the holding generated significant returns. At present Microsoft stocks are valued at $413 so that is a rise from an average buy price by 277%.
Alphabet Inc Class A (NASDAQ:GOOGL) with 4.32% of the portfolio
After a short break in trading, Cooperman reinvested in Google in Q3 2020 buying 1.2 million shares at $76. The price has seen a steady rise to its current value of $169. In the same period, Cooperman sold almost half of the holding, leaving him with 650 thousand stocks. The current value of the holding is $90.8 million and the stock price jumped from an average buying price of 133%.
Regal Rexnord Corp (NYSE:RRX) with 4.23% of the portfolio
RRX holding saw an increase in Q4 2023 by adding 135 thousand shares. This is a new investment dating back to Q4 2022. In that period Cooperman’s bought on average for $133 while the price rose by 20%. The value of the holding is $88.8 million showing great potential for the future.
Sector Allocation
While the top 20 holdings of Cooperman’s portfolio take 88% of the entire portfolio that may point to the highly concentrated structure of its holdings. On the other hand, his investments are well-diversified among different sectors, with Consumer Discretionary, Finance, and Tech in the lead. The current sector allocation of Omega Advisors is:
- Consumer Discretionary with 23.6% of the portfolio valued at $495 million
- Finance with 19.4% of the portfolio valued at $407 million
- Technology with 19.3% of the portfolio valued at $405 million
- Utilities with 10.6% of the portfolio valued at $222 million
- Healthcare with 6.9% of the portfolio valued at $144 million
- Energy with 6.89% of the portfolio valued at $144 million
- Industrials with 6.33% of the portfolio valued at $132 million
- Materials with 3.56% of the portfolio valued at $74 million
- Real Estate with 1.89% of the portfolio valued at $39 million
Leon Cooperman’s Biography
Leon Cooperman was born in 1943 in the South Bronx as a son of Polish immigrants. In his youth he wasn’t picky about jobs so he worked from fruit packaging to theater ushering.
After he got an MBA from Columbia Business School in 1966 he joined Goldman Sachs. The first 22 years in the company he spent in the investment research department later advancing to the position of a partner in charge. Cooperman was also co-chairman of the Investment Policy Committee and the Chairman of the Stock Selection Committee.
His work left a major influence on the overall Goldman Sachs operations. This resulted in being included in the Institutional Investor Magazine All-America Research Team for portfolio strategy. On top of that, he was ranked first in the sector from 1977 to 1985.
In 1991 he left Goldman Sachs and the positions of General Partner and SEO of the Goldman Sachs Asset Management. He did this to incept his own management firm, named Omega Advisors. He is the CEO, CIO, and Chairman of the company.
In 2016 SEC charged him with insider trading in connection with a case of Atlas Pipeline Partners from July 2010. Omega Advisors agreed to pay a $4.9 million settlement in May 2017 but didn’t admit any wrongdoings. According to the deal with the SEC, Omega Advisors were under thorough scrutiny until 2022.
In 2018 he decided to transform his hedge fund into a family office. Cooperman made this decision due to his age and that chasing indexes is not something that he would want to do for the rest of his life.
Investment Principles And Strategies
Cooperman called himself a disciple of Warren Buffett, Benjamin Graham, and David Dodd. He was through his career always leaning towards value investing. However, a twist in the plot is that he, unlike many value investors, also looked to benefit not only from long-term undervaluations but also from short-term overvaluations.
Cooperman is a patient investor who carefully observes target companies for prolonged periods. He chooses to invest in companies that show resilience to stay atop during crisis periods.
As a value investor, he is conducting both qualitative and quantitative analysis of the security to determine its intrinsic value. Other bottom-up factors that he respects and takes into account are quality management and companies that are willing to buy back their stocks. That way they are showing their belief in themselves, and that they have a solid plan for the future.
He avoids investing in bonds due to his deep concerns about the United States' fiscal situation. That combined with a potential gain of 2% to 4% is not something that he would bet on.
Leon Cooperman’s Portfolio Performance Analysis
Historical Performance
Since the inception of the fund in 1991 it has managed to generate average annual returns in the range of 12.5%. At its peak, it managed over $10 billion in AUM, but it never achieved these numbers after the SEC accusation in 2007. In the last three years, the fund generated a cumulated gain of 55% placing it amongst the top performers in the industry.
Notable Success
- Cooperman’s Overall Success
From his humble beginnings in the Bronx, he managed to finish one of the best universities in the country and become an integral part of the finance giant Goldman Sachs. That alone is a great script for a movie, but he didn’t stop there.
He founded a hedge fund that since 1991 almost every year outperformed the S&P 500. Achieving that type of success for a prolonged time is a feat not easy to accomplish.
- Mr Cooper Group Holding
In just 6 years of investing Cooperman's average stock buy price moved from $12 to the current $81. Mortgage company value is steadily increasing and in just a year it moved from $44 to the current value. For Cooperman, this means that the value of the stock increased by over 550% from his average buying price.
Notable Failure
- Accusations Of Insider Trading By The SEC
In 2016 SEC accused Omega Advisors of engaging in insider trading 2016. The case in question was already six years old dating to 2010 and the situation with longstanding holding Atlas Pipeline Partners.
Cooperman supposedly found out from insiders from inside the company that they would sell their share in Elk City Operations. That would lead to a rise in stock value, which Omega Advisors used to increase their stake in the company.
Cooperman denied any wrongdoing and agreed to pay $4.9 million to settle these accusations. Later he was claiming that he would win the case, but that he wanted to leave it behind as soon as possible.
Although Cooperman was not found guilty this event triggered over $2 billion in redemption from the investors. Before the SEC investigation, Omega Advisors had $5.1 billion in AUM, while after only a couple of months that figure dropped to $3.1 billion.
