Billionaire Leon Cooperman’s Top Picks Still Looking Down the Rabbit Hole

Veteran investor Leon Cooperman‘s Omega Advisors has had two straight losing years with a 10% loss in 2015. From the looks of it, the first three months of this year haven’t provided the turnaround that the firm was looking for either. We took a weighted average of Omega’s equity picks in companies with a market capitalization of more than a billion dollars, and these 44 stocks signaled a 4.5% loss for the investment firm in the first quarter. In contrast, the S&P 500 Index gained almost 1% during this period. In this article we will take a closer look at the performance of Omega’s largest equity holdings heading into the first quarter, before the investor files its latest 13F filing, in which it will report the positions held as of the end of March.

Our research determined that following the small-cap stocks, that hedge funds are collectively bullish on, can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

#5 AerCap Holdings N.V. (NYSE:AER)

– Shares Owned by Baupost Group (as of December 31): 5.60 Million

– Value of Holding (as of December 31): $241.69 Million

The share price of the $7.88 billion aircraft leasing company has lost around 6% since the beginning of 2016. However, the stock has been on the rise since mid-February and AerCap Holdings N.V. (NYSE:AER) announced a $400 million share repurchase program in April. Furthermore, the company purchased 6 aircraft, signed lease agreements for 100, and executed sale and part-out transactions for 25 aircraft during the first quarter. Activist investor David Einhorn‘s Greenlight Capital holds about 7.37 million shares of AerCap Holdings N.V. (NYSE:AER).

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#4 First Data Corp (NYSE:FDC)

– Shares Owned by Baupost Group (as of December 31): 15.42 Million

– Value of Holding (as of December 31): $242.04 Million

Omega’s newly initiated holding, in the largest IPO of 2015, has had a rough start this year as the share price of the New York-based provider of electronic commerce and payment solutions for merchants, financial institutions and card issuers has plummeted by 33% year-to-date. However, First Data Corp (NYSE:FDC) posted EPS of $0.24 on revenue of $2.80 billion for the first quarter, surpassed both top- and bottom-line estimates by a considerable margin, which prompted several analysts to raise their price targets on the stock. Ken Griffin’s Citadel Investment Group holds about 6.16 million shares of First Data Corp (NYSE:FDC).

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#3 Allergan plc Ordinary Shares (NYSE:AGN)

– Shares Owned by Baupost Group (as of December 31): 781,800

– Value of Holding (as of December 31): $244.31 Million

The first quarter dip in Allergan plc Ordinary Shares (NYSE:AGN)’s stock price stood at a little over 14%, but that slide has deepened even further into the red territory owing to Treasury Department’s new tax-inversion rules that made the botox-maker’s $160 billion merger with Pfizer infeasible. Treasury Secretary Jacob Lew limited the percentage of ownership that a U.S. company can own of a post merger foreign company in order to stymie tax inversion deals. Pfizer could have reduced its effective tax rate by 8% had the deal gone through. In this way, Allegan’s stock has lost over 35% since the beginning of the year. Andreas Halvorsen‘s Viking Global reduced its holding in Allergan plc Ordinary Shares (NYSE:AGN) by 17% to 5.98 million shares during the last three months of 2015.

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#2 American International Group Inc (NYSE:AIG)

– Shares Owned by Baupost Group (as of December 31): 4.10 Million

– Value of Holding (as of December 31): $253.86 Million

In the follow-up of being under pressure from activist investors Carl Icahn and John Paulson since late last year, American International Group Inc (NYSE:AIG)’s stock price has declined by 11% since the beginning of 2016. Peter Hancock, AIG’s CEO, has to a large extent pacified the activists by granting them some concessions like board seats and recently filing for an initial public offering of its mortgage insurer, United Guaranty, without having to undergo a drastic step such as splitting the company in three parts. It seems that the insurance company can now constructively work with the activists and streamline its operations. For the first quarter, the company posted adjusted EPS of $0.65, missing the consensus estimates of $1.00.  Carl Icahn‘s Icahn Capital holds about 42.24 million shares of American International Group Inc (NYSE:AIG), which account for about 3.4% of the company’s outstanding shares.

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#1 Alphabet Inc (NASDAQ:GOOGL)

– Shares Owned by Baupost Group (as of December 31): 427,600

– Value of Holding (as of December 31): $332.69 Million

The $528 billion tech giant  has inched down by 7% since the beginning of 2016. The company missed the estimates by reporting EPS of $7.50, versus expectations of $7.97, while the revenue of $20.26 billion was lower than the projected $20.37 billion. Moreover, the company promised to allocate resources in a more efficient way after its moonshot bets gobbled up a staggering $3.6 billion last year. Boykin Curry‘s Eagle Capital Management raised its stake in Alphabet Inc (NASDAQ:GOOGL) by 5% to 1.84 million shares during the fourth quarter.

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Disclosure: None