Leon Cooperman’s Omega Advisors recently filed a 13G with the SEC, reporting the sale of its stake in Caesars Entertainment Corp (NASDAQ:CZR). As per its 13F filing for the reporting period of March 31, 2015, the investment manager had a position in Caesars Entertainment consisting of 7.33 million shares valued at $77.21 million. What is of more interest is that Caesars Entertainment Corp (NASDAQ:CZR) is not the only company whose stock have been sold by the investment manager in recent months. Omega Advisors sold its entire stake in HCA Holdings Inc (NYSE:HCA), Gilead Sciences, Inc. (NASDAQ:GILD), Cabot Oil & Gas Corporation (NYSE:COG), and Apple Inc. (NASDAQ:AAPL), as reported in its most recent 13F filing. We’ll take a look at these sales in this article and try to determine why Cooperman has moved out of them.
We follow hedge funds like Omega Advisors because our research has shown that their stock picks historically managed to generate alpha even though the filings are up to 45-days delayed. We used a 60-day delay in our back tests to be on the safe side and our research showed that the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Total Return Index by an average of 95 basis points per month between 1999 and 2012. After adjusting for risk, our calculations revealed that these stocks’ monthly alpha was 80 basis points. We have also been sharing and tracking the performance of these stocks since the end of August 2012, during which time they have returned 142%, outperforming the S&P 500 ETF by nearly 84 percentage points (see more details here).
Leon Cooperman’s latest 13G mentioned the sale of its entire stake in Caesars Entertainment Corp (NASDAQ:CZR) on June 5, 2015. After considering the stock market performance of the casino/entertainment company, Cooperman’s decision seems justified, as the shares of Caesars Entertainment have declined 59.22% year-to-date. On top of its dismal stock market performance, the entertainment company is facing multiple lawsuits, including one brought against it by UMB Bank, with potential damages exceeding $6 billion. According to the bank, Caesars Entertainment Corp (NASDAQ:CZR) breached the terms of its first-lien notes by notwithstanding the guarantee of its operating unit’s obligations. The hospitality service company said that the lawsuit is without merit and its restructuring agreement with the fund holders stays intact. Paulson & Co and Mason Capital Management are among investment managers that hold substantial positions in the hospitality service provider.
HCA Holdings Inc (NYSE:HCA) is another company in which Cooperman sold out of his entire stock position. As per the 13F filing of Omega Advisors, the investment manager disposed of 1.09 million shares of the healthcare service company. What makes it a surprising decision is the fact that the shares of HCA Holdings Inc (NYSE:HCA) have improved 13.64% year-to-date. The stock reached its all-time high earlier this month at $85.06 per share and is among the top gainers in the healthcare industry over the last three months. Lone Pine Capital and Glenview Capital are among the major stockholders of HCA Holdings Inc (NYSE:HCA).