Billionaire Leon Cooperman‘s Omega Advisors and his son Wayne Cooperman’s Cobalt Capital Management are among the exceptional funds that we track. After analyzing their 13F filings with the U.S. Securities and Exchange Commission for the quarterly period ended March 31, we identified similarities in the industries and some of the stocks that both father and son are betting on, with the financial, services, and basic materials sectors being the preferred ones of the two investors. Omega Advisors had a public equity portfolio valued at $6.25 billion at the end of the first quarter, representing an uptick of $417.41 million compared to the end of 2014. On the other hand, Cobalt Capital Management had a public equity portfolio value of $934.07 million, representing an increase of $111.08 million. Leon founded Omega Advisors in 1991 after he retired from his position as the CEO of Goldman Sachs Asset Management, while Wayne got into the hedge fund business at just 28 years of age, co-founding Fusion Partners in 1994. In 1999, he rebranded the hedge fund as Cobalt Capital Management after his partner opted out. In this article, we cover three stocks that the two funds managed by father and son are betting on: E*TRADE Financial Corp (NASDAQ:ETFC), AerCap Holdings N.V. (NYSE:AER), and KAR Auction Services Inc (NYSE:KAR).
Professional investors like Leon and Wayne Cooperman, spend considerable time and money conducting due diligence on each company they invest in, which makes them the perfect investors to emulate. However, we also know that the returns of hedge funds on the whole have not been good for several years, underperforming the market. We analyzed the historical stock picks of these investors and our research revealed that the small-cap picks of these funds performed far better than their large-cap picks, which is where most of their money is invested and why their performances as a whole have been poor. A portfolio of the 15 most popular small-cap stocks among funds outperformed the S&P 500 Total Return Index by 95 basis points per month between 1999 and 2012 in backtesting. The exceptional results of this strategy got even better in forward testing after the strategy went live at the end of August 2012. A portfolio consisting of the 15 most popular small-cap stock picks among the funds we track has returned more than 142% and beaten the market by more than 83 percentage points since then, and by 4.6 percentage points in the first quarter of this year (see the details).
Omega Advisors’ held a total of 4.9 million shares of E*TRADE Financial Corp (NASDAQ:ETFC) with a market value of $140.40 million, down from 6.88 million shares held at the end of the fourth quarter of 2014. Wayne’s Cobalt Capital Management meanwhile held a total of 1.88 million shares with a market value of $53.64 million, with the stock ranking as its top holding. The New York City-based financial services company announced on June 3 that retirement assets under its management have more than doubled over the past five years, showing how more people are turning to the company to entrust it with the management of their retirement, savings, and investing. The assets have grown to well over $50 billion from $24 billion in May 2010. The retirement assets have grown by $18 billion over the past three years. Analysts believe that the firm’s growing focus on its core activities will result in greater profitability as it seeks to unlock digital financial solutions backed up by human support and expertise.