Leon Cooperman’s stock picks might be worth monitoring, after all the billionaire veteran investor has been operating on Wall Street for 50 years and has a knack for making alpha returns on his investment.
Leon Cooperman’s stock picks often entails picking stocks of target companies.
“When you have a takeover you generally make a decent amount of money because of the takeover premium” said Leon Cooperman.
“When you have a takeover you generally make a decent amount of money because of the takeover premium”
United Airlines is on Leon Cooperman’s stock picks
“You have good sponsorship Warren Buffett own about 10% of the company” said Leon Cooperman.
“Leon Cooperman isn’t expecting Warren Buffett to buy an airline. Nevertheless, he said that Warren Buffett isn’t ruling it out. “Maybe I will get lucky there” said Leon Cooperman.
Leon Cooperman’s stock picks are driven by fundamental analysis, which is a method of evaluating a security in an attempt to assess its intrinsic value, by examining related economic, financial, and other qualitative and quantitative factors.
“What drove me to United Airlines is that the market is 17 times earnings. When we recommended it was 7 to 6 times earnings including the adjustment quarter” said Leon Cooperman.
“What drove me to United Airlines is that the market is 17 times earnings. When we recommended it was 7 to 6 times earnings including the adjustment quarter”
Leon Cooperman’s stock picks also tend to favor the stocks of those companies that are engaged in stock-buybacks.
“The company bought back 45% of its equity capital in the last 4 years. There out with guidance, 8,10 12 I think those are low because they assuming very modest purchase when the stock goes down they are buyers of their own stock” said Leon Cooperman.
“Trading at seven times this years earnings and is growing 10% a year” – Leon Copperman, on AMC stock
AMC networks is another one of Leon Cooperman’s stock picks.
Leon Cooperman likes this stock a lot. AMC networks stock is “trading at seven times this years earnings and is growing 10% a year” said Leon Cooperman.
“But what is the interesting element of that, is that 17 percent of the economic interest is owned by the Dolan family because it is class A and class B stock they own 60% of the vote” added Leon Cooperman.
So AMC networks are one of Leon Cooperman’s stock picks because insiders buying stocks.
“Anything they do (Dolan family) in the area of capital management is not motivated by the desire to entrench themselves, they are already entrenched by A and B stock and I believe that you got to pay attention when 17% owner is aggressively buying back stock. They are telling you that the stock is undervalued, the industry is consolidating and I would not be surprised if someone took them out- the take-out value is closer to $80. We got involved at $50” said Leon Cooperman.
“Can’t find a United with an empty seat” – Leon Cooperman
Leon Cooperman’s stock picks with respect to energy stocks are Keane Group in the fracking business Keane Group.
With oil prices on an upward trajectory, Leon Cooperman is bullish on the fracking business, which is the extraction of oil and gas from shale rock layers within the earth. Moreover, the current Trump administration is supportive of a US energy independent policy.
Another one of Leon Cooperman’s stock picks in the energy sector is Nabors Industry which is engaged in onshore drilling activity. “These stocks are selling a 2/3 times cash flow and I think the price of oil is going to be rising not declining which will be good for their business” said Leon Cooperman.
But how would Leon Cooperman’s stock pick differ over geographical regions?
“I think the market (US) is adequately valued I think the European market is more interesting, Japan is even more interesting. If you look at Japanese price-earnings ratios of their companies versus interest rates then there is extraordinary value” said Leon Cooperman.
Leon Cooperman’s stock picks leans towards Japan.
“I happen to be very much of a bottom-up guy I don’t have the competency of individual stocks but I would say on a macro basis Japan would look very interesting”.
The Interviewer then quizzed why Leon Cooperman’s stock picks include United, despite the stock already being up by 30%.
Leon Cooperman replies, “You don-t know anything for sure, I look at the price-earnings ratio, the free cash flow, I look at the markets that they operate in, is there going to be demand for air-traffic, are we in an expansionary environment, or a contraction environment?
What is the free cash flow and what does the balance sheet look like? “Any you make a judgment” said Leon Cooperman.
Lets say they could even grow EPS 12-15% and it is trading at a one-third market multiple and çi like what they are doing with cash.
I met COO and he said he didn’t want any cash compensation (United Continental), he wanted his entire package in options, which the board didn’t want to do”. They (management) are eating their own cooking, they believe in what they are doing”
“Can’t find a United with an empty seat” said Leon Cooperman.
PayPal is also one of Leon Cooperman’s stock picks .
Dan Loeb very bullish on PayPal he has raised the target to $155 . We are positive on it but it is not one of our largest holdings.
Major holding is united, Google, AMC networks, First datum, Microsoft, said Leon Cooperman.
Sinclair Broadcast is another one of Leon Cooperman’s stock picks. “It got hammered because they poorly handled an acquisition, they are sitting with a billion dollars of cash in their balance sheet-I am expecting company use their cash intelligently”.
“Who do you think is going to one trillion dollars, Google, Amazon, Microsoft all three stocks you own and are north of 800 billion dollars”
“Amazon is growing most rapid of the three. I hope google because that is my biggest position” said Leon Cooperman.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.