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Billionaire Leon Cooperman Shakes Things Up: Apple Inc. (AAPL), Walgreen Company (WAG), SandRidge Energy Inc. (SD)

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Billionaire Leon Cooperman grew up the son of a plumber living in the South Bronx. He worked his way through Hunter College, working as a Xerox quality control engineer. After getting his MBA from Columbia, Cooperman worked at Goldman Sachs for twenty five years before leaving in 1991 to start his hedge fund, Omega Advisors.OMEGA ADVISORS Leon Cooperman

Omega is now a multi-billion dollar hedge fund focused on value investing. The fund uses a top-down approach to investing, selecting sectors and then finding undervalued companies using fundamental analysis. During the fourth quarter, Cooperman and his hedge fund sold off a couple large-cap stocks, while making a big bet on a mid-cap oil and gas play. Let’s check out his top moves.

Cooperman dumped these stocks

A couple of big sell offs for Cooperman during the fourth quarter included Apple Inc. (NASDAQ:AAPL) and Walgreen Company (NYSE:WAG). Apple was previously Cooperman’s fifth largest holding, while Walgreen was thirty-first. At a time when a number of hedge funds are dumping their Apple stock, on concerns that growth could be slowing, Cooperman joined the crowd and sold off all of his shares during the fourth quarter. From my perspective, although Apple Inc. (NASDAQ:AAPL) has a leading position in the iPhone and iPad markets, these products carry too much weight for the tech stock, making up over 70% of 2012 revenue. What’s more is that its mobile operating system, iOS, continues to be dominated by Google’s Android, and even its iPad appears to be losing market share. The pressure in both segments, mobile and tablet, are robust, with major tech companies gunning for Apple, including Samsung, Google, Blackberry, Nokia, and Sony; as a result, I believe Apple Inc. (NASDAQ:AAPL) is still a “wait and see” story.

Another big sell-off for Cooperman was Walgreen Company (NYSE:WAG). This comes after the company saw revenue and earnings weakness during the fourth quarter due to its mishap with Express Scripts. The company saw its major segment, prescription sales (60% of revenue) down 7% last quarter on a year over year basis, and prescription comp sales down 11%, this was on the back of a 4% decline in customer traffic.

Although Walgreen did indeed re-sign a multi-year deal with Express Scripts, the damage may already be done, with major peer CVS expected to have picked up some 30% of the customers switching pharmacies after the Walgreen-Express fallout. Meanwhile, Walgreen Company (NYSE:WAG) is seeing market share infringement from major retailers Wal-Mart Stores, Inc. (NYSE:WMT) and Target Corporation (NYSE:TGT). I tend to agree with Cooperman, that perhaps Walgreen is no longer a stock to own.

Cooperman’s big buy

A big new position for Cooperman was SandRidge Energy Inc. (NYSE:SD). The energy stock is now the hedge fund’s seventh largest holding and 2.84% of its portfolio.  What’s more is that Cooperman recently upped his stake by 11% earlier this month, now owning 5.5% of SandRidge’s outstanding shares. Cooperman joins other hedge funds that are battling SandRidge Energy Inc. (NYSE:SD) management in hopes of unlocking shareholder value by replacing management and implementing better utilization of its assets.
S&P expects oil and gas production to be up another 18% in 2013, after being up 21% in 2012; a positive for the industry and SandRidge, especially since M&A should remain a hot-topic for the industry. The merger and acquisition market remains robust for North American onshore oil and gas, and activist hedge fund owner, TPG-Axon, believes that it would be very advantageous for a larger player in the oil and gas industry, with a lower cost of capital, to step in and buy SandRidge Energy Inc. (NYSE:SD) for its impressive asset base (read more about the value in SandRidge).

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