In this article, we will look at 10 undervalued stocks to buy according to billionaire Leon Cooperman.
Leon Cooperman is an American billionaire investor and hedge fund manager. Mr. Cooperman comes from humble beginnings. Born into a family of Polish immigrants, Leon Cooperman worked his way up to the top. He was the first person in his family to earn a college degree, and he did not stop there. Mr. Cooperman went on to earn an advanced degree in business management from Columbia Business School, from where he graduated in 1967.
Leon Cooperman is a prominent and credible figure in the hedge fund industry. He is known for conducting extensive market research before initiating or exiting positions in public equity. Mr. Cooperman has prioritized following a value-investing approach toward stock-picking and has been successful in spotting potential in undervalued companies.
As of the fourth quarter of 2021, Mr. Cooperman manages more than $1.99 billion in 13F securities through his hedge fund, Omega Advisors. The fund has investments across a diverse range of industrial sectors including financials, technology, healthcare, energy, and materials, among others. Omega Advisors has a top ten holdings concentration of 58.1%. Among the Omega Advisors’ most notable stock picks we have Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
Undervalued Stocks to Buy According to Billionaire Leon Cooperman
10. Arbor Realty Trust, Inc. (NYSE:ABR)
Omega Advisors’ Stake Value: $42,918,000
Percentage of Omega Advisors’ 13F Portfolio: 2.15%
PE Ratio as of May 25: 9.50
Number of Hedge Fund Holders: 14
Arbor Realty Trust, Inc. (NYSE:ABR) invests in a diversified portfolio of structured finance assets in the multifamily, single-family rental, and commercial real estate markets in the United States. Arbor Realty Trust, Inc. (NYSE:ABR) is one of the best undervalued stocks to buy according to Leon Cooperman. As of May 25, the stock has a forward PE ratio of 9.50, trading at $16.12 with a market capitalization of $2.77 billion.
Analysts are bullish on Arbor Realty Trust, Inc. (NYSE:ABR). On April 25 Piper Sandler analyst Crispin Love initiated coverage of the stock with an Overweight rating and a $20 price target. The analyst cited the company’s diversified revenue model, industry tailwinds in the multifamily bridge space, and an attractive valuation while giving his opinion on the stock.
By the end of Q1 2022, 14 hedge funds were long Arbor Realty Trust, Inc. (NYSE:ABR) with stakes worth $92.53 million. Of these, $42.91 million were attributed to Omega Advisors. The investment covers 2.15% of Leon Cooperman’s 13F portfolio.
9. General Motors Company (NYSE:GM)
Omega Advisors’ Stake Value: $43,973,000
Percentage of Omega Advisors’ 13F Portfolio: 2.2%
PE Ratio as of May 25: 5.02
Number of Hedge Fund Holders: 76
On May 10, Berenberg analyst Adrian Yanoshik initiated coverage of General Motors Company (NYSE:GM) with a Buy rating and a $55 price target.
At the close of Q1 2022, 76 hedge funds held stakes in General Motors Company (NYSE:GM). The total value of these stakes was $5.50 billion. This is compared to 90 hedge funds in the previous quarter with stakes worth $7.13 billion.
Some of the most notable stock picks of billionaire investor Leon Cooperman include General Motors Company (NYSE:GM), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
Oakmark Funds mentioned General Motors Company (NYSE:GM) in its “Oakmark Global Fund” first-quarter 2022 investor letter, and explained why the company is “significantly undervalued”:
“General Motors (NYSE:GM) was a detractor during the quarter, due to increased macro uncertainty, higher fuel prices, and concerns over rising input costs, which pressured the company in particular and the auto industry as a whole. While we are closely monitoring the potential impact of these dynamics, industry demand remains robust, driven by strong consumer balance sheets and pent-up demand after multiple years of constrained production. We also remain confident in GM’s ability to navigate a complex operating environment, which the company has consistently demonstrated over the past few years. Finally, the long-term picture remains bright. We believe GM is significantly undervalued, is well-positioned for the long-term transition to electric vehicles and has numerous needle-moving ancillary business opportunities (most notably Cruise, which is an industry leader in autonomous vehicle technology) that are underappreciated.”
8. Lithia Motors, Inc. (NYSE:LAD)
Omega Advisors’ Stake Value: $44,543,000
Percentage of Omega Advisors’ 13F Portfolio: 2.23%
PE Ratio as of May 25: 5.98
Number of Hedge Fund Holders: 46
Lithia Motors, Inc. (NYSE:LAD) operates as an automotive retailer in the United States. The company operates through three business segments: Domestic, Import, and Luxury.
As of April 21, Wells Fargo analyst Colin Langan has a $350 price target and an Overweight rating on Lithia Motors, Inc. (NYSE:LAD).
At the close of Q1 2022, 46 hedge funds were bullish on Lithia Motors, Inc. (NYSE:LAD) with stakes worth $2.55 billion. One of these hedge funds was Omega Advisors, which held sizeable stakes of $44.54 million in the company, up 10% from its Q4 2021 stakes. Lithia Motors, Inc. (NYSE:LAD) represents 2.23% of Omega Advisors’ 13F portfolio.
Here is what Oakmark Funds said about Lithia Motors, Inc. (NYSE:LAD) in its first-quarter 2022 investor letter:
“As is typical during periods of significant volatility, we added a new name to the portfolio. Lithia Motors (NYSE:LAD) is the largest franchised auto dealer group in the United States. The company has a long history of creating shareholder value through best-in-class operations and consistent acquisitions of smaller dealers at attractive returns. There is a long runway for management to continue creating value through such acquisitions. Management believes this will drive earnings per share to more than $50 by 2025, even as car prices return to pre-pandemic levels. Meanwhile, Lithia has a significant opportunity to further accelerate growth through Driveway, its online auto retailing platform. We believe Lithia’s existing nationwide infrastructure provides Driveway with significant competitive advantages in e-commerce, which smaller dealers will struggle to replicate. Driveway is not generating any earnings today, but it could become a major contributor over the next five to seven years. With the stock priced at less than 7x management’s 2025 EPS target and with substantial future growth potential from Driveway, we believe Lithia shares are a bargain today.”
7. Chimera Investment Corporation (NYSE:CIM)
Omega Advisors’ Stake Value: $51,336,000
Percentage of Omega Advisors’ 13F Portfolio: 2.57%
PE Ratio as of May 25: 6.57
Number of Hedge Fund Holders: 21
Chimera Investment Corporation (NYSE:CIM) operates as a real estate investment trust (REIT) in the United States. On May 5, the company announced earnings for the fiscal first quarter of 2022. Chimera Investment Corporation (NYSE:CIM) generated quarterly revenues of $137.70 million, up 1.96% year over year, but missed estimates by $3.32 million. The company registered an EPS of $0.39 and exceeded estimates by $0.02.
Chimera Investment Corporation (NYSE:CIM) is an undervalued dividend payer. As of May 25, the stock has a PE ratio of 6.57 and a hefty forward yield of 13.85%. On May 4, Chimera Investment Corporation (NYSE:CIM) declared a quarterly cash dividend of $0.33 per share. The dividend is payable on July 28 to investors of record at the close of business on June 30.
As of April 27, Barclays analyst Mark DeVries has an $11 price target and an Underweight rating on Chimera Investment Corporation (NYSE:CM).
6. Energy Transfer L.P. (NYSE:ET)
Omega Advisors’ Stake Value: $57,610,000
Percentage of Omega Advisors’ 13F Portfolio: 2.89%
PE Ratio as of May 25: 7.33
Number of Hedge Fund Holders: 31
Another significantly undervalued dividend payer adored by billionaire Leon Cooperman is Energy Transfer L.P. (NYSE:ET). As of May 25, the stock has a forward yield of 7.16%, a PE ratio of 7.33, and is trading at $11.44 with a market capitalization of $34.28 billion. Omega Advisors owns 7 million shares of Energy Transfer L.P. (NYSE:ET) which amount to a stake of $57.61 million.
Analysts are getting bullish on Energy Transfer L.P. (NYSE:ET). On April 26, Morgan Stanley analyst Robert Kad raised his price target on Energy Transfer L.P. (NYSE:ET) to $15 from $12 and reiterated an Overweight rating on the shares.
At the end of Q1 2022, 31 hedge funds were long Energy Transfer L.P. (NYSE:ET) with stakes worth $699.42 million. This is compared to 36 hedge funds in the prior quarter with stakes worth $635.60 million.
Mr. Cooperman’s hedge fund holds a hefty stake in Energy Transfer L.P. (NYSE:ET). Other stocks Omega Advisors is heavily invested in include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
5. Coterra Energy Inc. (NYSE:CTRA)
Omega Advisors’ Stake Value: $60,800,000
Percentage of Omega Advisors’ 13F Portfolio: 3.05%
PE Ratio as of May 25: 7.29
Number of Hedge Fund Holders: 39
Coterra Energy Inc. (NYSE:CTRA) operates as an independent oil and gas company involved in the exploration and production of oil, natural gas, and natural gas liquids in the United States. As of May 25, the stock has a PE ratio of 7.29, a decent dividend yield of 1.84%, and has gained a whopping 106.44% over the past twelve months. Coterra Energy Inc. (NYSE:CTRA) is one of the best undervalued stocks to buy according to billionaire Leon Cooperman.
On April 25, Raymond James analyst John Freeman raised his price target on Coterra Energy Inc. (NYSE:CTRA) to $42 from $31 and reiterated an Outperform rating on the shares.
4. Bausch Health Companies (NYSE:BHC)
Omega Advisors’ Stake Value: $69,025,000
Percentage of Omega Advisors’ 13F Portfolio: 3.46%
PE Ratio as of May 25: 2.31
Number of Hedge Fund Holders: 48
Bausch Health Companies (NYSE:BHC) develops, manufactures, and sells a range of pharmaceutical, medical device, and over-the-counter (OTC) products. Bausch Health Companies (NYSE:BHC) is among the top 5 undervalued stocks to buy according to billionaire Leon Cooperman. As of May 25, the stock has a remarkably low PE ratio of 2.31, trading at $9.60 a share with the company’s market capitalization sitting at $3.59 billion.
On May 11, BMO Capital analyst Gary Nachman lowered his price target on Bausch Health Companies (NYSE:BHC) to $15 from $26 but maintained a Market Perform rating on the shares.
3. Cigna Corporation (NYSE:CI)
Omega Advisors’ Stake Value: $103,334,000
Percentage of Omega Advisors’ 13F Portfolio: 5.19%
PE Ratio as of May 25: 11.66
Number of Hedge Fund Holders: 63
Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. The stock is among the top 10 holdings of Omega Advisors and is also one of the best undervalued stocks to buy according to billionaire Leon Cooperman.
This May, Barclays analyst Steve Valiquette raised his price target on Cigna Corporation (NYSE:CI) to $310 from $275 and reiterated an Overweight rating on the shares ahead of the company’s investor day on June 3.
By the end of Q1 2022, 63 hedge funds were long Cigna Corporation (NYSE:CI) with stakes of $2.69 billion in the company. This is compared to 53 hedge funds in the fourth quarter of 2021, with stakes of $1.92 billion. The hedge fund sentiment for the stock is positive.
Here is what Davis Funds had to say about Cigna Corporation (NYSE:CI) in its “Davis Opportunity Fund” fourth-quarter 2021 investor letter:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
2. Devon Energy Corporation (NYSE:DVN)
Omega Advisors’ Stake Value: $119,881,000
Percentage of Omega Advisors’ 13F Portfolio: 6.02%
PE Ratio as of May 25: 8.20
Number of Hedge Fund Holders: 66
As of the end of Q1, 2022, Omega Advisors owns more than 2.72 million shares of Devon Energy Corporation (NYSE:DVN) which amount to a stake of $119.88 million. The investment covers 6.02% of Leon Cooperman’s 13F portfolio.
On May 9, Raymond James analyst John Freeman raised his price target on Devon Energy Corporation (NYSE:DVN) to $90 from $85 and reiterated a Strong Buy rating on the shares.
At the close of the first quarter of 2022, 66 hedge funds were long Devon Energy Corporation (NYSE:DVN) with stakes worth $1.92 billion. This is compared to 51 hedge funds in the previous quarter with stakes of $1.74 billion. The hedge fund sentiment for the stock is positive.
1. Mr. Cooper Group Inc. (NASDAQ:COOP)
Omega Advisors’ Stake Value: $176,801,000
Percentage of Omega Advisors’ 13F Portfolio: 8.88%
PE Ratio as of May 25: 10.92
Number of Hedge Fund Holders: 30
Mr. Cooper Group Inc. (NASDAQ:COOP) operates as a financial services company, providing servicing, origination, and transaction-based services related to single-family residences in the United States. The stock is the top 13F holding of Omega Advisors as of Q1 2022. According to the Q1 SEC filings, Omega Advisors owns 4.24 million shares of Mr. Cooper Group Inc. (NASDAQ:COOP) which amounts to a stake value of $176.80 million. The investment covers 8.88% of Leon Cooperman’s 13F portfolio.
At the close of Q1 2022, 30 hedge funds were bullish on Mr. Cooper Group Inc. (NASDAQ:COOP). The total stakes of these hedge funds were valued at $504.20 million.
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Disclose. None. 10 Undervalued Stocks to Buy According to Billionaire Leon Cooperman is originally published on Insider Monkey.
