With interest rates still at historical lows, bonds have failed to appease investors’ appetite for yield. What many investors have done is replaced bonds with dividend stocks that reward shareholders with handsome yields. Leon Cooperman is one of the billionaire hedge fund managers that has made good use of this tactic, so in this article we’ll take a look at Omega Advisors‘ top equity positions that carry hefty dividend payments as well.
Hedge fund sentiment is an important metric for assessing long-term profitability. At Insider Monkey, we track over 740 hedge funds, whose quarterly 13F filings we analyze to determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (read more details here).
#5 New Media Investment Group Inc (NYSE:NEWM)
– Annual Dividend: $1.32
– Dividend Yield: 8.28%
We’ll start with New Media Investment Group, a holding company that invests in local media assets. During the second quarter, Leon Cooperman has trimmed his fund’s exposure to the stock, reducing its holding by 1% to 3.17 million shares worth $57.3 million at the end of June. Hedge fund interest in New Media Investment Group Inc (NYSE:NEWM) cooled down a bit during the quarter, as the number of long hedge fund positions among the funds we track fell to 15 at the end of June, from 18 at the end of March. Israel Englander has decided to dump 79% of his investment during the quarter, leaving Millennium Management with 115,737 shares worth $2.09 million. Analysts at Citigroup are not very optimistic about the prospects of New Media Investment Group Inc (NYSE:NEWM). They have recently downgraded the stock to ‘Sell’ from the previous ‘Neutral’ rating and have reduced their price target to $13 per share from $17 per share. According to the note issued to investors, the analysts pointed to the fact that M&A activity in the sector is slowing down and the company could face challenges in trying to achieve its target of $1 billion in M&A by the end of the current year. This will negatively affect synergies, which will in turn put pressure on New Media Investment Group’s EBITDA.
#4 New Residential Investment Corp (NYSE:NRZ)
– Annual Dividend: $1.84
– Dividend Yield: 12.93%
Although Cooperman and his team have cut their stake in New Residential Investment Corp by nearly 20% during the quarter, this is still one of Omega Advisors’ top equity positions. According to its latest 13F filing, the fund held 5.38 million shares valued at a little over $74 million. New Residential Investment Corp (NYSE:NRZ) has a market cap of $3.61 billion and is currently trading at an earnings multiple of 10, significantly lower than the industry average of 26. So far this year, the stock has been on a solid uptrend, managing to advance by around 17%. The smart money sentiment towards New Residential Investment Corp (NYSE:NRZ) took a nosedive during the second quarter, with only 12 of the funds followed by Insider Monkey having reported a stake as of the end of June, down from 22 registered three months earlier. Billionaire Ken Griffin and his team are very bullish on this stock, having increased their investment by over 3,000% to 1.12 million shares valued at $15.5 million.
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