Billionaire Leon Cooperman‘s Omega Advisors and his son Wayne Cooperman’s Cobalt Capital Management are among the exceptional funds that we track. After analyzing their 13F filings with the U.S. Securities and Exchange Commission for the quarterly period ended March 31, we identified similarities in the industries and some of the stocks that both father and son are betting on, with the financial, services, and basic materials sectors being the preferred ones of the two investors. Omega Advisors had a public equity portfolio valued at $6.25 billion at the end of the first quarter, representing an uptick of $417.41 million compared to the end of 2014. On the other hand, Cobalt Capital Management had a public equity portfolio value of $934.07 million, representing an increase of $111.08 million. Leon founded Omega Advisors in 1991 after he retired from his position as the CEO of Goldman Sachs Asset Management, while Wayne got into the hedge fund business at just 28 years of age, co-founding Fusion Partners in 1994. In 1999, he rebranded the hedge fund as Cobalt Capital Management after his partner opted out. In this article, we cover three stocks that the two funds managed by father and son are betting on: E*TRADE Financial Corp (NASDAQ:ETFC), AerCap Holdings N.V. (NYSE:AER), and KAR Auction Services Inc (NYSE:KAR).
Professional investors like Leon and Wayne Cooperman, spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 142% and beaten the market by more than 83 percentage points since then, and by 4.6 percentage points in the first quarter of this year (see the details).
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Omega Advisors’ held a total of 4.9 million shares of E*TRADE Financial Corp (NASDAQ:ETFC) with a market value of $140.40 million, down from 6.88 million shares held at the end of the fourth quarter of 2014. Wayne’s Cobalt Capital Management meanwhile held a total of 1.88 million shares with a market value of $53.64 million, with the stock ranking as its top holding. The New York City-based financial services company announced on June 3 that retirement assets under its management have more than doubled over the past five years, showing how more people are turning to the company to entrust it with the management of their retirement, savings, and investing. The assets have grown to well over $50 billion from $24 billion in May 2010. The retirement assets have grown by $18 billion over the past three years. Analysts believe that the firm’s growing focus on its core activities will result in greater profitability as it seeks to unlock digital financial solutions backed up by human support and expertise. E*TRADE Financial Corp (NASDAQ:ETFC) posted earnings per share of $0.29 on a revenue of $456.00 million, beating analysts’ consensus estimate of $0.24 in earnings per share and revenue of $446.10 million. The revenue was down 4% on a year-over-year basis. As for the current financial year, analysts expect the company to post earnings per share of $1.18. The company carries out several of its activities through subsidiaries such as ETRADE SECURITIES Inc, BrownCo, LLC, ETRADE Capital Management LLC, and more. At the end of the first quarter a total of seven billionaires were invested in the stock, accounting for $465.60 million in aggregate value. Some of these are John Griffin‘s Blue Ridge Capital, Julian Robertson’s Tiger Management, and Louis Bacon’s Moore Global Investments.
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Leon held a total of 3.91 million shares of AerCap Holdings N.V. (NYSE:AER) worth $151.88 million while Wayne held 687,921 shares, with a market value of $30.03 million, having raised his stake in the stock from 501,000 shares held at the end of the fourth quarter of 2014. The company is among the world’s leading aircraft leasing firms, and has its headquarters in Schiphol, Netherlands. Analysts at Imperial Capital have been following the stock’s performance and its environment and they believe that the stock has a 28% potential upside based on its $47.65 opening price per share on June 12. The research firm has given the stock an “Outperform” rating. Eight research firms that have been covering the stock believe that it will post $1.32 in earnings per share for the current quarter and have given it $5.35 in earnings per share for the current fiscal year. Analysts’ expectation for AerCap Holdings N.V. (NYSE:AER) on a longterm basis are also attractive, as they have given it 9.6% earnings per share growth potential over the next three-to-five years. At the end of the first quarter a total of eight billionaires were invested in the stock, with an aggregate investment value of $1.36 billion. A few of these billionaires’ funds are David Einhorn‘s Greenlight Capital, Lee Ainslie’s Maverick Capital, and Barry Rosenstein’s JANA Partners.
Omega Advisors’ latest 13F showed that it owned 3.25 million shares of KAR Auction Services Inc (NYSE:KAR) valued at $117.02 million at the end of the first quarter 2015, a 4% decrease compared to the previous quarter. Wayne held a total of 724,597 shares of the company valued at $27.48 million. That also represented a downward movement, as he held 1.24 million shares at the end of the fourth quarter of 2014. The company has been working on an expansion strategy in auctions and digital services in an effort to stabilize its earnings prospects. The used vehicle auction services company headquartered in Carmel, Indiana, recently announced the expansion of its Digital Services Group by acquiring Autoniq and MobileTrac, a company doing business as instaVIN, providing digital information about cars. The company’s ADESA unit also recently announced that its subsidiary acquired AutoVIN, which is a vehicle inspection business, initially owned by DataScan Field Services. This is besides physical motor vehicle inspection locations that the company’s CEO Jim Hallett recently announced. This is all in anticipation of industry-wide growth, mainly from off-lease vehicles. In terms of earnings performance, KAR Auction Services Inc (NYSE:KAR) registered earnings per share of $0.42 and analysts expect the stock to post earnings per share of $0.46 for the financial quarter ending June 30, 2015. At the end of the first quarter, a total of eight billionaires’ firms had stakes in the stock, having a total investment value of $746.16 million. A few of these are Daniel S. Och‘s OZ Management with 6.16 million shares, D E Shaw with 2.76 million shares and Steve Cohen’s Point72 Asset Management with 2.51 million shares.
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