Omega Advisors was founded by Leon Cooperman in 1991 after he had headed Goldman Sachs Asset Management, with Cooperman becoming a billionaire on the strength of the fund’s performance. The fund recently filed its 13F with the SEC, disclosing many of its long equity positions as of March (we track these filings from hundreds of hedge funds as part of our work developing investment strategies; we have found, for example, that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year.
We can also go through the most recent 13F and identify Cooperman’s favorite stocks in a number of areas, including stocks notable for high dividend yields. We would note that some of those dividend payments are risky and so investors should treat this list as a source of initial ideas rather than blindly follow Cooperman’s picks. Read on for the five largest holdings in Omega’s portfolio as of the end of March paying dividend yields of 3.5% or higher or see the full list of Cooperman’s holdings over time.
According to the 13F, the fund owned 7.2 million shares of Linn Energy LLC (NASDAQ:LINE) at the end of the first quarter of 2013. Linn Energy LLC (NASDAQ:LINE), an oil and gas company, has been making quarterly payments of 72.5 cents per share for the last several quarters, which at current prices comes out to a yield of nearly 9%. The stock price has fallen slightly in the last year, while the S&P 500 has gained over 25%, and even at the current valuation Linn is arguably expensive with a forward earnings multiple of 22.
Best of the rest
Kinder Morgan Inc (NYSE:KMI), which transports and stores petroleum products, was another of Omega’s income stock picks with the filing disclosing ownership of a little over 5 million shares. Kinder Morgan Inc (NYSE:KMI)’s dividend yield is 3.8, and the company has a record of increasing its dividend payments over time (although the stock only became publicly traded in early 2011). There are some concerns with value here as well, although Kinder Morgan Inc (NYSE:KMI) has been recording increases in its revenue and earnings compared to the first quarter of 2012.