Billionaire Leon Cooperman’s New High Dividend Pick: Chimera Investment Corporation (CIM)

Page 1 of 2

OMEGA ADVISORSOmega Advisors, a hedge fund managed by billionaire Leon Cooperman, has reported a position of over 55 million shares in Chimera Investment Corporation (NYSE:CIM) in a 13G filed with the SEC. Omega now owns 5.4% of the outstanding shares of the $3.1 billion market cap company, which invests in mortgage backed securities (including residential MBSs) and other mortgage loans and is organized as a real estate investment trust. REITs receive favorable tax treatment as long as they distribute 90% of taxable income to shareholders, which often results in high dividend yields. Chimera has paid dividends of 9 cents per share in each of the last three quarters; 36 cents per share in annual dividends makes for a yield of almost 12%.

Omega had owned just under 1 million shares at the end of September (see Cooperman’s stock picks). We track hedge fund filings because they can sometimes be useful for finding unfamiliar stocks or developing investment strategies (for example, the most popular small cap stocks among hedge funds as listed in our August 2012 newsletter outperformed the S&P 500 by 18 percentage points between September and January).

Chimera is currently on notice from the New York Stock Exchange for failure to file its financial statements in a timely fashion; the company is expected to release its 10-K for the 2011 fiscal year this week, and its 10-Q for Q1 2012 within 60 days. While of course investors should be concerned by the apparent poor management that has resulted in this situation, it’s possible that the market has driven the share price down in response and left an attractive investment opportunity. Cooperman and his team seem to be staking their capital on some amount of stability going forward, or at least enough to make collecting the high yield worthwhile. Chimera has also publicly estimated its book value at about $3.30 per share as of September 2012, so the current price of about $3 may represent a discount. This book value is up from an estimate of $3.08 per share as of the end of June. We would note that the dividend payment has at times been reduced (Chimera paid dividends of 51 cents per share in 2011, for example), so it is possible that if the company’s fortunes decline it would reduce its payments further.

Billionaire David Tepper’s Appaloosa Management had been buying shares of Chimera during the third quarter of 2012, and owned over 10 million shares according to its 13F filing (find Tepper’s favorite stocks). D.E. Shaw, a large hedge fund managed by billionaire David Shaw, reported a position of a little under 16 million shares at the time.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!