Fellow hedge fund manager and billionaire John Paulson has publicly stated he supports Dish Network’s bid for Sprint, while Cooperman has made no disclosure for either party.
Transocean LTD (NYSE:RIG)
Shares of Transocean LTD (NYSE:RIG) have fallen more than 8% since I published Should You Follow Carl Icahn into Transocean’s Deep Waters back on January 28.
The offshore driller gained attention in January when activist investor Carl Icahn stated he acquired a majority ownership position in the embattled company. Icahn’s investment came following news that Transocean had reached a $1.4 billion settlement with the Department of Justice related to the 2010 Deepwater Horizon incident.
Icahn stepped in once a “safe path” had cleared for Transocean, and now the stock has become a hedge fund favorite. Mr. Icahn encountered a setback in his activist role on May 17, when shareholders defeated his proposal for a $4 dividend at the company’s annual meeting. More than 75% of total votes supported a financially responsible $2.24 dividend. Icahn, however, earned a small victory with 1 board seat for his proposed nominee.
Wall Street is less optimistic on Transocean when compared to Citigroup and Sprint Nextel. Analysts believe the firm’s organic growth is limited and the stock is fairly valued.
Cooperman is likely betting that Icahn’s involvement with Transocean will result in further upside. While Icahn lost the battle for a higher dividend, he still has “skin in the game” with a new board seat. I cannot recommend Transocean for this reason alone, when combined with lukewarm fundamentals.
In conclusion, Leon Cooperman is considered one of Wall Street’s brightest minds and a “living legend” according to many high-profile investors. His track record of 14.3% average annual returns, after fees, compared to the S&P 500’s 8.6% average return since 1996 speaks for itself.
Cooperman recommends the purchase of Citigroup, Sprint, and Transocean based on solid long-term fundamentals. My analysis supports his bullish case on Citigroup and Sprint; however, I cannot recommend buying Transocean.
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The article Billionaire Leon Cooperman’s Top Stocks for the Rest of 2013 originally appeared on Fool.com and is written by John Macris.
John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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