Should You Be Concerned About Billionaire Leon Cooperman’s Top Holdings?

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Earlier today, CNBC reported that Leon Cooperman‘s hedge fund has been subpoenaed by the U.S. Attorney’s Office in New Jersey as well as by the SEC. “In the letter, Cooperman says the investigation is in very early stages and that the firm is cooperating fully. The subpoenas seek information on the trading of certain securities,” CNBC reported.

Cooperman also told the following to CNBC’s Scott Wapner:

“We are cooperating fully with the government’s request for information. There have not been any allegations of any wrongdoing at Omega. We have conducted ourselves properly at all times and are confident that when the government completes its review it will come to the same conclusion.”


Here are the largest positions in Cooperman’s portfolio at the end of 2014 and their performance today:

Stock Value Today's Return
Actavis plc (NYSE:ACT) $243 million 0.23%
Citigroup Inc (NYSE:C) $230 million -0.37%
American International Group Inc (NYSE:AIG) $225 million -0.64%
Navient Corp (NASDAQ:NAVI) $207 million -0.84%
Sirius XM Holdings Inc.(NASDAQ:SIRI) $202 million 0.78%

We haven’t detected any significant moves in any of these stocks. Most of these are large-cap stocks, except for Navient Corp (NASDAQ:NAVI). Our research has shown that hedge funds’ most popular large-cap stock picks historically underperformed the market by an average of 7 basis points per month. On the other hand, hedge funds’ top 15 small-cap picks managed to beat the market by nearly a percentage point per month between 1999 and 2012 (read the details here). We believe hedge funds manage too much money and as a result of that they are forced to invest in large-cap stocks which fail to generate any meaningful outperformance.

Leon Cooperman’s large-cap stock picks aren’t an exception. Between 1999 and 2012 the large-cap stocks in Cooperman’s 13F portfolio demonstrated an average monthly return of 6 basis points vs. 32 basis points for the S&P 500 Total Return Index.

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