Billionaire Leon Cooperman’s Cheap Stock Picks Include UnitedHealth Group Inc. (UNH)

Omega increased its holdings of Capital One Financial Corp. (NYSE:COF) by 38% between January and March, to a total of 1.7 million shares. In the first quarter of 2013 reduced margins caused Capital One’s earnings to fall by over 20% versus a year earlier. Wall Street analysts believe that the company will rebound and earnings per share will rise in 2014, as can be seen by the fact that the stock carries trailing and forward P/Es of 11 and 9 respectively. We might hold off on Capital One for now, but would keep an eye out for further developments.

Cooperman had 1.6 million shares of UnitedHealth Group Inc. (NYSE:UNH) in his portfolio as of the beginning of April. Many health insurers are trading fairly cheaply, and UnitedHealth is no exception with trailing and forward earnings multiples in the 11-12 range. However, earnings have been down here as well despite rising revenue and we’d at least want to see stable net income numbers at that pricing. Billionaire David Shaw’s D.E. Shaw more than doubled its stake in UnitedHealth during Q1, closing March with 3.2 million shares according to its own 13F (find D.E. Shaw’s favorite stocks).

As a result we think that we’d avoid both Capital One Financial Corp. (NYSE:COF) and UnitedHealth Group Inc. (NYSE:UNH) until financial performance improves. We’ve mentioned that we are skeptical of Freeport-McMoRan’s acquisitions but the stock is certainly cheap and with a high dividend yield as well it may be worth looking into. XL Group also seems interesting, given its value metrics and the fact that net income has been up recently, and we’d be interested in learning more about the company.

Disclosure: I own no shares of any stocks mentioned in this article.