Leon G. Cooperman, the manager of New York City-based hedge fund Omega Advisors, is one of the most well-known value-oriented investors of the current generation of money managers. Mr. Cooperman continues to follow in the footsteps of Benjamin Graham and David Dodd, seeking to buy securities at the right price. Leon Cooperman started his Omega Advisors in 1991, after serving as the head of research and a top strategist at Goldman Sachs. His flagship Omega Overseas fund generated a net-of-fees average return of 14.6% since inception in January 1992 through June 2014, outperforming the 9.3% average return generated by the S&P 500 Index over the same time span. Nonetheless, Mr. Cooperman has suffered his second consecutive down year in 2015, generating a negative return of approximately 10% across his funds. It is true that value investors have underperformed in recent years, as value investing has been ignored at the expense of growth-oriented investing. Even so, the history shows that value stocks have outperformed growth stocks on aggregate, so value investing is likely to come back into full force again. For that reason, Insider Monkey decided to lay out a list of five long-term stock picks owned by Leon Cooperman, which may represent attractive value investing opportunities for the years ahead.
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At Insider Monkey, we track around 730 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5 Sirius XM Holdings Inc. (NASDAQ:SIRI)
– Shares Owned by Omega Advisors (as of December 31): 32.15 Million
– Value of Omega’s Holding (as of December 31): $130.87 Million
Billionaire Leon Cooperman trimmed his fund’s stake in Sirius XM Holdings Inc. (NASDAQ:SIRI) by 9.79 million shares during the December quarter, ending 2015 with 32.15 million shares valued at $130.87 million. Mr. Cooperman firstly acquired a stake in the company during the first quarter of 2012, with the investment paying off quite handsomely in the subsequent years. Sirius XM is a satellite ratio provider that transmits music, sports, news, and other channels in the United States on a subscription fee basis. The company primarily distributes its satellite radios through the sale and lease of new vehicles, as it has agreements with most major automakers to offer radios in their vehicles. Sirius has been shifting focus on the used car market lately, a move that is anticipated to drive up earnings and cash flow. Even though the new car industry has been growing at a higher rate than the used car industry, the former is substantially lower in size than the latter. Thus, the used car market can trigger a new wave of subscriber growth at the company. Sirius XM’s subscriber revenue, which accounted for approximately 84% of total revenue last year, reached $3.82 billion in 2015, increasing by 8% year-on-year. The increase was mainly driven by higher daily weighted average number of subscribers and an increase in particular self-pay subscription rates, which was partly offset by subscription discounts. Shares of Sirius XM are up by 3% in the past 12 months and trade around 22.2-times expected earnings, versus the forward P/E multiple of 17.6 for the S&P 500. Peter Adam Hochfelder’s Brahman Capital reported ownership of 90.91 million shares in Sirius XM Holdings Inc. (NASDAQ:SIRI) through its 13F filing for the December quarter.