Lee Cooperman Buys More Ocwen Financial

Per a Form 4 filed with the SEC, Omega Advisors' Lee Cooperman has indicated he's purchased more shares of Ocwen Financial (OCN).  This is the second time this year he's purchased shares, as we highlighted his previous OCN buy as well.

In various trades on February 28th, March 1st, and March 2nd, Cooperman bought 539,798 shares in total at prices around $3.5872 for various Omega investment vehicles.

For more on this investor, be sure to also check out Cooperman's recent interview in the Graham & Doddsville newsletter.

Per Google Finance, Ocwen Financial is "a financial services holding company. The Company, through its subsidiaries, originates and services loans. The Company's segments include Servicing, Lending, and Corporate Items and Other. The Company's Servicing segment consists of its residential servicing business. The Company's Lending segment is focused on originating and purchasing conventional and government-insured residential forward and reverse mortgage loans. The Company's Corporate Items and Other segment includes revenues and expenses of Automotive Capital Services (ACS) and its other business activities. Its servicing clients include some of the financial institutions in the United States, including the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), the Government National Mortgage Association (Ginnie Mae) and non-Agency residential mortgage-backed securities (RMBS) trusts. "

Graham & Doddsville New Issue: Lee Cooperman, David Poppe, John Harris & More

The Winter 2018 issue of Columbia Business School's Graham & Doddsville newsletter is out.  It features interviews with Lee Cooperman of Omega Advisors as well as David Poppe and John Harris of Ruane, Cunniff & Goldfarb.  Also, they talk with Vulcan Value Partners' C.T. Fitzpatrick, as well as Seth Fischer of Oasis Management.

Cooperman talked about the market's run: "I believe we're adequately priced.  I think we're heading to a normalization.  We have been living through a very strange period."  He doesn't see euphoria in the market yet, though notes everyone expects the market to head higher.  He pointed to 1987 as an example where the market traded at 27x earnings.

The gentlemen from Ruane Cunniff talked about their investment in Alphabet (GOOG) which they recently bought more or and it's now around 10% of their fund.  They also touched on their thesis on Credit Acceptance Corp (CACC).  (We recently posted Sequoia Fund's Q4 letter here.)

The issue also includes student investment pitches including long Staples 8.5 2025 unsecured notes, long FleetCor Technologies (FLT), and long First Data (FDC).

Embedded below is the Winter 2018 issue of CBS's Graham & Doddsville newsletter:



You can download a .pdf copy here.

Lee Cooperman Acquires More Ocwen Financial

Lee Cooperman of Omega Advisors has filed a Form 4 with the SEC regarding shares of Ocwen Financial (OCN).  Per the filing, Cooperman's most recent activity was buying shares of OCN on January 22nd and 23rd at $3.1582.  In total across various vehicles, he purchased 494,459 shares. 

In an additional 13G filed with the SEC, Cooperman disclosed he now owns 10.5289% of the company with over 14.04 million shares.  Omega previously only owned 8.66 million OCN shares as of the end of the third quarter in 2017.

Per Yahoo Finance, Ocwen Financial is "a financial services holding company, engages in the servicing and origination of mortgage loans in the United States. Its Servicing segment provides residential and commercial mortgage loan servicing, special servicing, and asset management services to owners of mortgage loans and foreclosed real estate. This segment's residential servicing portfolio includes conventional, government insured, and non-agency loans. The company's Lending segment originates and purchases conventional and government-insured residential forward and reverse mortgage loans primarily through its correspondent lending arrangements, broker relationships, and directly with mortgage customers. The company also provides short-term inventory-secured loans to independent used car dealers to finance their inventory. Ocwen Financial Corporation was founded in 1988 and is headquartered in West Palm Beach, Florida."

Delivering Alpha Conference Notes 2017: Robertson, Dalio, Chanos, Cooperman & More

CNBC and Institutional Investor's Delivering Alpha Conference just took place and featured many big name speakers.  Here's notes from the event itself and summaries of television interviews as well:


Delivering Alpha Conference Notes 2017


Julian Robertson (Tiger Management)

Robertson noted that interest rates need to increase because there's a bubble forming in the stock market.  Since rates are low, stocks don't really have much in the way of competition for money.  He also predicts that Trump will ask Janet Yellen to stay on as Federal Reserve Chair.

He recently got back into Alibaba (BABA).  He previously owned it at "a very low price" (seven years ago) but sold it around $100 but now he's back in.  Says it's unbelievable how the company has seen 50% in earnings.  While other investors claim it to have accounting issues, Robertson said, "It would have to be such a giant fraud.  I mean, I can't imagine anything would be that colossal."

Argued that Apple (AAPL), Facebook (FB), and Google (GOOG) are cheaper than they would have been in the 1960's, 70's or 80's.  On Netflix (NFLX), he noted "does anyone not like it?"  He said it "might be a little out of reach" now but it's still tempting him because it's run by good people and he loves it.

He likes the cruise industry, saying that "(It) has come of age.  And older people my age are attracted to the cruise ship industry.  And they are booming right now, and all over the world they are booming.  And I think they're for the golden oldies."

Robertson still also owns Air Canada: "We got into it at around 8 or 9.  And it's now 23, approaching 24, and the multiple is about the same as when we got in, which is all of five times earnings.  So we have too much Air Canada, but I can't make myself sell it."

Also noted he doesn't think he'll ever understand Bitcoin.

He also continued to share his view that part of the hedge fund crisis is exacerbated by the fact that there's so many of them now and they compete against each other.

Robertson also gave advice to the younger generations: be sure that you love the field and let that be what guides you.



Ray Dalio (Bridgewater Associates)

Dalio's biggest concerns were the following: wealth gap, social conflict, and various financial burdens (debts and pensions).

"I think we're probably in a 2.5% type of growth environment.  I mean, the real question is, to some extent, whether you can unleash the productivity by some of the changes that a pro-business environment can produce."

He thinks tax reform etc will be a watered down version and will come later.

He likened the current environment to 1937 in terms of the early stages of a tightening.

Dalio thinks that we're in an environment with a lot of conflict: political, conflict between parties, conflict between countries.  "This is very important.  This is even more important than how the tax changes are going to take place."

The Bridgewater founder then talked about balancing alpha and beta.  He said gold is essential and part of that balance.  He called it "an effective diversifier of assets" as well as "an alternative version of cash."  He feels it should be 5-10% of everybody's portfolio.

He also thinks it'd be terrible if Gary Cohn left the administration and it'd be bad for the market too.

When asked what he's most worried about, Dalio mentioned risks like North Korea, but said his bigger worry is long-term: wealth and social gap and the conflicts that arise from that.  He's worried about the various debt and pension burdens.

We also recently posted Ray Dalio's TED talk which takes you inside a meeting at Bridgewater.  He also has penned a new book, Principles.



Leon Cooperman (Omega Advisors)

He said that "Conditions that normally lead to significant market decline are either not present or not forecastable."

"The market is in a zone of fair and full valuation.  I see very few signs of exuberance."

Stocks mentioned by Cooperman include First Data (FDC), which he's owned for some time now and called very cheap.

Also, United Continental (UAL), which he felt has solid management that's identified a lot of cost opportunities.  He thinks earnings there can see around 15% over the next few years.  Operating profits could rise by 50% over the next few years and the company has bought back 2% of its shares

He also pitched two energy ideas: Hess (HES), as well as WPX Energy (WPX).  "The solution for low oil prices is low oil prices.  These two (stocks) have growing production profiles and a net asset value well above current prices at existing oil prices."  He thinks oil is headed higher to $60.  Says the sector has been overly discounted.  Says Hess in particular will increase production.

He also likes Shire (SHPG), citing its growth, positive pipeline, and the expectation of stock buybacks.

Said bonds look like they're in a bubble but at same time notes the Fed has been 'forcing people into risk' via its monetary policies.  It will change one day he says, but not yet.



Boaz Weinstein (Saba Capital)

He warned investors to avoid junk bonds.  Argued that half or a third of junk bonds today are held by retail investors, who have a ton of exposure, partly due to the rise of ETFs.  He feels the high yield market is overheated and he's short bonds of various retailers and hospitals.  At the same time, he's long equity of some of those same companies.  "Equity is at a much more rational price and credit markets are ignoring those signals."

Noted that portfolio protection is cheap but few are buying it.  "Does everyone think they can get out on the top?"



Jim Chanos (Kynikos Associates)

He says that "what's worked will continue to work" and monetary will stay easy and investors will live with the valuations.

Chanos says it's easier to find short ideas in this environment, but those ideas "don't work" due to the underlying upward trend.  He says the market was far more correlated last year than it has been this year.

He's short Continential Resources (CLR).  "People have been looking at the industry with rose colored glasses.  This is a problem with the North American shale business.  If we don't get a pickup in the company's fortunes in the back half of the year it's going to struggle."



Jeff Smith (Starboard Value)

Pitched Perrigo (PRGO), generic drug maker.  Says a lot of these products are sold on Amazon now and the company can expand sales of its over-the-counter medicines via that channel.  Shares have been undervalued from pricing pressures.

Also mentioned Altaba (AABA) as a top idea.  This is the former Yahoo stub that is left after selling the core Yahoo business.  What's left is a stake in Alibaba (BABA) and Yahoo Japan, etc.  It's basically a holding company.



Mick McGuire (Marcato Capital)

The activist investor has taken a new stake in Terex (TEX), the company that makes construction equipment.  They started buying last year and roughly own around 1.1 million shares per a recent SEC filing as they own 6% of the company

McGuire feels the company should see a revenue boost after a strategic re-positioning.  It's in the middle of an operating turnaround and is reducing SG&A, so there's operational profit upside.  The company also switched its sourcing program which could potentially save them around $500 million annually.  Thinks shares could triple, and has already doubled since he invested in 2016.



Chamath Palihapitiya (Social Capital)

The venture capitalist who now also runs public investments, said that he's massively long cryptocurrency bitcoin.  He calls the blockchain technology disruptive.

He argued that tech investors need to look at a company's ability to innvoate: "There's just this massive trade right now between the disruptors and the disrupted."  He says there's a lot of opportunity to be long disruptors and short the disrupted.



Jamie Dimon (JPMorgan Chase)

He called bitcoin worse than Tulip Bulbs and thinks it will eventually blow up.  Said he'd fire any of his traders trading bitcoin for being stupid.  Says it could go up to $100,000 before it blows up, who knows.  His daughter bought it, it went up, now she thinks she's a genius, he said.  Thinks it could be vulnerable to government intervention.

Thinks government policies are stifling growth.  If things changed, we'd see 3% growth rather than sub 2% which we've seen annualized now.  Singled out small businesses as most impacted.

Argued banks in the US are very sound at the moment.  Says the successor to JPMorgan is inside JPMorgan.



Mary Erdoes (JPMorgan Asset Management)

When asked about US stocks or bonds, she said none of the above.  Sees enormous opportunities in Europe, Japan, and emerging markets.  Thinks that some investors are worried about emerging markets due to the US dollar as an 'anchor' currency.



Steve Mnuchin (Treasury Secretary)

He says that tax reform is too important not to be passed and that it can occur this year and might even be retroactive back to the beginning of 2017.  Said the President's number one concern is North Korea and security.  Said hedge funds wouldn't have the carried interest provision under Trumps tax proposal.



Steve Schwarzman (Blackstone Group)

He's optimistic on tax reform, saying the 'worst' we'd do is a tax cut somewhere around 25-28%.

He thinks the biggest risk to markets are geopolitical, in particular North Korea.  He said "i would not be buying office buildings in Seoul" though didn't comment further on how this would affect investment decisions.

Schwarzman also argued that he relationship between China and North Korea is not friendly as it is perceived to be.  "The Chinese do not want a nuclearized Korean peninsula, and they're very serious about that.  They also don't want to have a shooting war occur and have 20 million refugees from North Korea go into China.  So it's complicated for them as to what they do."



Barry Sternlicht (Starwood Capital)

"It feels like the ocean is full of money, but it could evaporate."  Says he's most worried about potential problems from North Korea or Syria.

SALT Conference Notes 2016: Griffin, Cooperman, Burbank, Chanos & More

The Skybridge Alternatives Conference, better known as the SALT Conference, is taking place in Las Vegas this week.  It's a multi-day affair with many speakers on a broad range of subjects.  We've condensed notes into primarily finance/investing thoughts from various hedge fund managers and investors below.


2016 SALT Conference Notes


Ken Griffin (Citadel):  Talked about how he built Citadel and the importance of culture at an organization.  'Avoid marrying a strategy' and instead focus on building a platform with the best people.  Business really taught him how to delegate and manage people.  On finding good talent: you've gotta be able to sell them on why they should leave and come to you.  You have to go out and find that talent instead of waiting for them to come to you.  The ones that 'knock on your door' aren't the best.  One interesting quote:  "Who is the number five manufacturer of personal computers?  Who cares?  We're in a more and more winner take all world."


Leon Cooperman (Omega Advisors):  He talked about a trend of investors moving from active to passive strategies and says that hedge fund performance can't really justify the fees these days, so fees need to come down.  He said that long-term (i.e. 'permanent') capital is doing good because they don't have to worry about lockups (citing Warren Buffett).  The other winner has been quant strategies.  Pitched the stock First Data (FDC) which recently IPO'd.  Says he's got around ~20% of his fund in structured credit at the moment.  Reiterated his belief that conditions for a recession are not present (a concept he's talked about for a while now).  Thinks the bubble is in fixed income.  Government bonds are a bad idea.  Likes Tetragon Financial, yields 7%, dividend coverage of 4x.  Buying a stock trading at half of book.


Kyle Bass (Hayman Capital):  Implied that investors need to lower their return expectations over the next few decades (5% global real return expectation).  Also agreed that fees for funds need to come down.  Says it's much harder to maintain investors than it is conviction.  Thinks we're in the early part of '07 in terms of credit/equity markets.  Says a hard landing in China is happening as we speak. Argues that China credit system is one of the biggest macro imbalances, something has to give sooner rather than later.  Hong Kong real estate is collapsing.


Roslyn Zhang (China Investment Corp):  Sovereign Wealth Fund.  Disappointed with hedge fund performance.  Compared Chinese retail investors to hedge fund herding.  Criticized those betting against the Chinese Yuan.  Argued that China's economy is still strong and that all of the building is due to the massive population; supply can be absorbed.


Sam Zell (Equity Group Investments):  Cost of regulation has gone up around 5x over the last decade.  Have been big investors in Brazil, Far East, Mexico. 


Ty Wallach (Paulson & Co):  Thinks specialty pharma stocks are oversold.  Specifically pointed out Valeant Pharmaceuticals (VRX) bonds.  Bought at 80cents on the dollar and says the co still has $10bn in equity value.  Could sell one of the many companies they've acquired if they need to cover debt payments.


Jeff Smith (Starboard Value): Activist investor.  Says settled with Yahoo (YHOO), put four new members on the board.  Notes the parts of the company are worth more than where its trading.  Core biz with $4bn in revenue, huge stake in Alibaba, Yahoo Japan, add it all up and it's more than the current market cap.  Said 'we're friendly but no one describes us as passive.'


Scott Ferguson (Sachem Head Capital):  Sold out of Zoetis (ZTS).  We noted how Pershing Square was also selling ZTS recently.  Ferguson was the one that brought the idea to Ackman to begin with (he used to work at Pershing).  Talked about how to change leadership and achieve things on behalf of investors: "Money's a great way to effectuate things" i.e. severance for getting rid of a CEO.  Says things are easier for activists these days and companies are more likely to engage. 


Clifton Robbins (Blue Harbour Group):  Activist investor.  Owns 10% of Investors Bancorp (ISBC), says it's trading at a discount to peers.  Also talked about Xilinx (XLNX), a net-cash semiconductor play; says they have some ideas as to how to utilize the balance sheet.


Michael Lewis (Author of Flash Boys and The Big Short):  Said he was surprised that both Moneyball and The Big Short were made into movies.  Said Christian Bale was dead-on with his interpretation of Michael Burry after just spending some hours with him.


Richard Chilton (Chilton Investments): Sherwin Williams (SHW): makes premium paint and coatings.  Says the company's purchase of Valspar was years in the making and they can repay the price with free cashflow in about 5 years.  Thinks there's a lot of synergies and margin overlap.  SHW does higher margins in paint/consumer and VAL does better margins in industrial coatings.  "You can't buy paint online."


John Lykouretzos (Hoplite Capital):  Takes a bit of an issue with the 'oligopoly' theme of airlines, saying it's still a competitive industry with margin pressure.  Bearish on the industry.  Main threats: excess capacity, union labor wage hikes, and of course higher oil prices.  Says that low cost carriers (LCC's) have basically destroyed the chance for legacy airlines to become a true oligopoly.  Thinks American Airlines (AAL) is the most compelling short play there.  Has some of the highest costs & exposure to rising oil.  High leverage.  Weakest FCF generation of the group.  Thinks that Southwest Airlines (LUV) can still add capacity even at higher oil prices (~$80 or so) and still generate high IRR.


John Burbank (Passport Capital):  Says China won't let outside companies 'win' especially Facebook.  "It's a hard place to win if you're not Chinese."  (While he didn't mention it, just look at Amazon's failed venture there as well).  Burbank owns Tencent (700.HK) with short Chinese Renminbi as partial hedge.  Thinks it isn't as much of a crowded trade as Facebook (FB) is.  His slide also said "Short FXI: Hedge out 'Old China' country-specific risk with China large cap ETF."


Jim Chanos (Kynikos Associates): Still short Cheniere Energy (LNG), calling it a 'pipe dream' and very expensive to peers.  Trades at 11-12x EV/EBITDA using "base case" 2021 EBITDA of $2.1bn.  Peers trading between 5-7x 2020 EBITDA.  Also commented on Alibaba (BABA) saying their accounting is dubious and that you don't really know what they're earning, calls it some of the most questionable he's ever seen. Chanos also recently talked about some of his short positions at the Sohn Conference.


For other recent hedge fund manager thoughts, head to our notes from Sohn Conference New York 2016.

Lee Cooperman's 7 Reasons For Market Upside

Omega Advisors founder Lee Cooperman recently appeared on Bloomberg TV and outlined seven reasons for market upside.  Here's his rationale:

1. This would be the first market peak that occurred without one Fed tightening.  He says on average, the market went up for 2.5 years after the first rate hike.

2. Bear markets come due to recession, overvaluation, hostile Fed, or a geopolitical event.  Those don't really seem to be present, with the caveat of the last one.

3. Markets usually peak during euphoria and he doesn't see any signs of that.

4. The stock market has already corrected recently.

5. What's the alternative to stocks... bonds yielding 2% or cash earning zero?

6. There's enormous substitution taking place of debt for equity.  Corporations are announcing big buybacks and that supports the market.

7. Valuation is reasonable

Embedded below is the video of Cooperman's Bloomberg appearance:



You can view recent portfolio activity from Cooperman here.

Lee Cooperman Boosts PennyMac Mortgage Investment Trust Stake

Omega Advisors' founder Lee Cooperman has filed a 13G on shares of PennyMac Mortgage Investment Trust (PMT).  Per the filing, Cooperman now owns 5.17% of the company with over 3.86 million shares.

This is up from the 2.6 million shares Cooperman owned as of the end of the second quarter.  The new filing was made due to activity on September 4th.

For more from Omega, head to Steve Einhorn's interview on Wall Street Week.

Per Google Finance, Pennymac Mortgage is "a specialty finance company that invests primarily in residential mortgage loans and mortgage-related assets. The Company conducts all of its operations, and makes all of its investments, through PennyMac Operating Partnership, L.P. and its subsidiaries. The Company operates through two segments. The correspondent production segment represents the Company’s operations aimed at serving as an intermediary between mortgage lenders and the capital markets by purchasing, pooling and reselling newly originated prime credit quality mortgage loans either directly or in the form of mortgage-backed securities (MBS), using the services of PNMAC Capital Management and PennyMac Loan Services, LLC. The investment activities segment represents the Company’s investments in mortgage-related assets, which include distressed mortgage loans, real estate acquired in settlement of loans, MBS, mortgage servicing rights and excess servicing spread.."

Steve Einhorn on Wall Street Week: "More Years" Left In Bull Market

Anthony Scaramucci and Gary Kaminsky's Wall Street Week this time around featured Steve Einhorn of Omega Advisors.  While many people will be more familiar with Omega's founder Lee Cooperman due to his numerous public appearances, Einhorn is an integral part of the team as well.

In his interview, Einhorn commented that Omega feels that there's still "quite a while to go" in this bull market.  While many investors anticipate markets to get choppy once rates start rising, Omega has taken a different stance.

He thinks that the situation in Greece and the timing of the rate rise aren't that important in the grand scheme of things.  He notes, "the fundamentals that largely determine how the stock market does are quite good, and partly overlooked by investors."

Embedded below is the video of Steve Einhorn's appearance on Wall Street Week (his portion starts at 18:34):



For more from Omega Advisors, we recently highlighted Lee Cooperman's latest interview.

For more from the show, be sure to check out Byron Wien's Wall Street Week interview as well.

Lee Cooperman's Masters In Business Interview

Barry Ritholtz's podcast on Bloomberg Radio called Masters in Business recently featured an interview with Omega Advisors' Lee Cooperman.

You can listen to the full interview here but we wanted to offer a few quick takeaways:

- He attributes his success to a combination of hard work, education, and luck.

- The only place he feels is a bubble currently is fixed income and interest rates are going higher

- Ritholtz mentioned research he's done on stock market returns when rates are rising. He noted that the only time stocks didn't do so well was when you're raising rates from already high levels and with inflation.  He says that when you're starting from a low base (like we are now), that returns tend to be favorable and Cooperman agreed.

- Cooperman looks at a top down macro level to survey the land and then drills down to specific companies.  He looks for "more growth at a lower multiple."

- He loves what he does and consumes content all the time.  He's always reading about companies, industries, macro stats, and meeting with other investors or companies trying to get a feel for how things are going and what will happen going forward.

- Cooperman is long Japan via the indexes rather than individual stocks because he doesn't have individual expertise there, but he has a macro view on the country and has expressed it as such.

- When a stock moves against him, sometimes he doubles down, sometimes he sits tight, and sometimes he sells.  It really depends on the specific situation.  If something has tangibly changed, you've got to make a different decision. 

-  "What is your sell discipline?"  1.  If it hits our price objective, even without circumstances changing, they sell.  2.  Not everything unfolds the way you anticipated, so get out.  3.  If you find a better idea, switch the capital there.  4.  If they change their view on the market and want to reduce exposure.

- On hedging: "We tend to be long-oriented.  Our short positions tend to be 5-15% of the fund.  We don't run a big gross book and a small net book, I find that very difficult."

- Average holding period:  Half our asset base is taxable, so we try to focus long-term.  75% of our investments have a horizon of over a year.

- For people looking into the business, his advice:  get a good education, don't go into a field just for the money, go to work for someone you respect and admire to build a good foundation.

- On what he knows today that he wished he knew when he first started: He wish he would have started his hedge fund earlier.


We've highlighted some of Cooperman's recent portfolio activity here.

Lee Cooperman Increases Loral Space & Communcations Stake

Omega Advisors' Lee Cooperman has filed a 13G with the SEC regarding his position in Loral Space & Communications (LORL).  Per the filing, Cooperman now owns 5.21% of the company with over 1.11 million shares.

This marks an increase in his position size of 94,225 shares since the end of the first quarter.  The filing was made due to activity on June 25th.

We also highlighted some other recent portfolio activity from Cooperman here.

Per Google Finance, Loral Space & Communications is "a satellite communications company. The Company, through its ownership interests in affiliates, is engaged in satellite-based communications services. The Company participates in satellite services operations through its 62.8% economic interest in Telesat Holdings Inc. (Telesat Holdco), which owns Telesat Canada (Telesat). Telesat owns and leases a satellite fleet that operates in geosynchronous earth orbit approximately 22,000 miles above the equator. The Company also own 56% of XTAR, LLC (XTAR), a joint venture between Loral and Hisdesat Servicios Estrategicos S.A. (Hisdesat). XTAR owns and operates an X-band satellite. Telesat earns revenue by providing ground-based transmit and receive services, selling equipment, installing, managing and maintaining satellite networks, and providing consulting services in the field of satellite communications. Telesat categorizes its revenues into: Broadcast, Enterprise Services and Consulting & Other."

Lee Cooperman Dumps Sandridge Energy Position

Omega Advisors' Lee Cooperman has filed a 13G with the SEC regarding shares of Sandridge Energy (SD).  Per the filing, Cooperman no longer owns a stake in the company.

The filing was made due to activity on June 19th.  At the end of the first quarter, Cooperman previously owned over 24.3 million shares of SD.

Sandridge shares have collapsed even further since the first quarter and now Cooperman has exited the name entirely.  He also recently sold his position in Caesars Entertainment, another troubled stock.

Per Google Finance, Sandridge is "an oil and natural gas company. The Company operates in three business segments: exploration and production, drilling and oil field services, and midstream services. The exploration and production segment explores for, develops and produces oil and natural gas in the Mid-Continent. The drilling and oil field services segment performs services for third parties, including third-party working interests in wells that it operates. The midstream services segment is engaged in gas marketing. The Company focuses on exploration and production activities in the Mid-Continent region of the United States. It also operates businesses and infrastructure systems, including gas gathering and processing facilities, marketing operations, a saltwater disposal system, an electrical transmission system and a drilling rig and related oil field services business."

Lee Cooperman Dumps Caesars Entertainment Stake

Omega Advisors' Lee Cooperman has filed a 13G with the SEC regarding shares of Caesars Entertainment (CZR).  Per the filing, Cooperman no longer owns any shares of CZR and has exited his position entirely.

He previously reported ownership of over 7.33 million shares at the end of the first quarter.  The updated filing was made due to activity on June 5th.

CZR shares recently hit a 52-week low as the company's subsidiary, Caesars Entertainment Operating Company is in bankruptcy and is fighting with creditors and this could have implications for the parent company. 

Per Google Finance, Caesars Entertainment is "a holding and casino-entertainment and hospitality services company. The Company's facilities include gaming offerings, food and beverage outlets, hotel and convention space, and non-gaming entertainment options."

Lee Cooperman on Wall Street Week: Market Not Cheap, But Not Priced To Perfection Either

Anthony Scaramucci and Gary Kaminsky's Wall Street Week recently interviewed Omega Advisors' Lee Cooperman.  He manages around $9.5 billion nowadays.


On the current stock market, Cooperman says, "It's not cheap, but it's not priced to perfection."

He also addressed the potential looming interest rate hikes by noting that historically, the market is higher one year after the first rate hike.  He says you only have to start to worry once rates get high enough that they start to compete with stock market returns.

He noted, "There's no question that every asset has benefited by our interest rate policy.  Having said that, a bubble is not in the stock market... if there's a bubble, it's in the bond market."  This echoes what Carl Icahn said on his Wall Street Week appearance as well.

Two specific stocks Cooperman commented on were Chimera (CIM) as well as Citigroup (C).

He talked about how he first looks at the market to discern whether it's overvalued or undervalued, and then he drills down to specific companies to see where some value might be.  He's always looking for "more growth at a lower multiple" and likes to hunt for mispricings in the market.

Embedded below is the video of Lee Cooperman's interview on Wall Street Week:



Be sure to check out other recent fund manager appearances, such as Jim Chanoss interview on Wall Street Week.

Lee Cooperman Discloses Resource America Stake

Omega Advisors' Lee Cooperman has filed a 13G with the SEC regarding shares of Resource America (REXI).  Per the filing, Cooperman has disclosed a 11.7% ownership stake in the company with over 2.69 million shares.

This is a new position for Cooperman since the end of the first quarter.  The filing was made due to activity on May 29th.

For more from Cooperman, head to his latest stock picks from the SALT Conference.

Per Google Finance, Resource America is "a specialized asset management Company, which evaluates, originates, services and manages investment opportunities through its real estate, commercial finance and financial fund management subsidiaries. The Company seeks to develop investment funds for outside investors, for which it provides asset management services, underLong-term management arrangements either through a contract with, or as the manager or general partner of, its sponsored investment funds. It maintains an investment in the funds it sponsors. In its real estate operations, it concentrates on the ownership, operation and management of multifamily and commercial real estate and real estate mortgage loans, including whole mortgage loans, first priority interests in commercial mortgage loans, known as A notes, subordinated interests in first mortgage loans, known as B notes, mezzanine loans, investments in discounted and distressed real estate loans and investments in value-added properties."

SALT Conference Best Ideas Panel: Chanos, Bass, Burbank, Cooperman, Karsch

At the Skybridge Alternatives (SALT) Conference in Las Vegas, the best ideas panel featured top hedge fund managers giving their top stock picks.  Here's a summary:


SALT Conference Best Ideas Panel: Chanos, Bass, Burbank, Cooperman, Karsch

Jim Chanos (Kynikos Associates):  Short oil integrators.  Specifically, short Royal Dutch Shell (RDS), doesn't like the merger with BG.  Short Chevron (CVX) as well due to their liquefied natural gas (LNG) challenges.  He also summed up Brazil's Petrobras (PBR) by saying they're "lying, cheating and stealing."  Also check out Chanos' SALT interview we posted earlier.


Kyle Bass (Hayman Capita): Long Perrigo (PRGO).  Doesn't think they get bought out by Mylan, but thinks someone else acquires them.  "We're short enough pharma."  Bass' separate new fund has been challenging pharma patents and says the industry is ridiculous as prices of drugs have spiraled out of control.  He gave the example of Mylan's (MYL) epipen drug specifically.  Says 13% of the company's revenue comes from this drug (which came off patent back in the 1950's).


John Burbank (Passport Capital): Long NCB AB, a Saudi Arabian banking play.  "The banking giant you've never heard of in the country you're too scared to invest in."  He says the vast majority of deposits don't pay interest due to Sharia Law so they'll be in a good position when rates rise.  Harps on the fact that outsiders are going to be able to invest in Saudi and by 2017 90% of investors will own some part.  "All the risks are already known in Saudi."  This isn't a new theme from him as Burbank has pitched Saudi investments in recent years.


Lee Cooperman (Omega Advisors): As he has been for a while now, he again advised reducing fixed income exposure.  He also said to go short on any rally if you're adventurous. His stock picks were the same as his Sohn Conference picks: ACT, AER, C, DOW, GM, GOOGL, PCLN.


Michael Karsch (Hunter Peak Capital): Long NOS SGPS, a Portuguese cable/wireless provider.  Biggest cable play and #3 wireless provider in the country, a hidden gem.


For more from the SALT conference, check out Dan Loeb's talk.

Sohn Investment Conference Notes 2015: Einhorn, Tepper, Ackman, Robbins & More

The 2015 Sohn Investment Conference just took place in New York where hedge fund managers pitched their latest stock ideas to benefit the Sohn Foundation and pediatric cancer research. 


Sohn Conference New York: 2015 Notes

- David Einhorn (Greenlight Capital): Short Pioneer Natural Resources (PXD).  Compared it to St. Joe (JOE).  Energy companies with negative development economics, negative on frackers in general.  US production boom: Bakken, Eagle Ford, Permian.  Buy the land, set up drills (expensive).  Huge cumulative CAPEX, more than oil brought out.  None of them generated cash flow, even when oil was high.  $20B cash burn by group last year.  Depletion is the "D" in EBITDAX.  It's not really growth, because once you get the oil out it's gone.  CAPEX has been 75% of revenue over last 5 years.  Not natural gas frackers, they are fine.  PXD:  Well located, well run, Permian assets mainly.  #2 pure play behind EOG.  $26B market cap, EV $27B, may earn $1.50 per share next year.  Spent $19B in CAPEX last few years - funded partially by capital raises.  Proved reserves have been flat or down despite huge CAPEX.  $36 rev/bbl, if you take out the $28 CAPEX, they lose $12/bbl.  Negative NPV if you include time cost of money.  If you had used $68 price of oil, reserves are only worth $9/share.  He says if you cut their costs, it's $22/share.  Value creation per $ spent is only 0.74.  You can view Einhorn's slideshow presentation on PXD here.  For even more from him, we recently posted up Greenlight Capital's Q1 letter as well.


- Barry Rosenstein (JANA Partners): Walgreens (WBA) and Qualcomm (QCOM).  WBA an example where activism worked.  12 layers of management between CEO and store managers vs. 5 at CVS.  Turnaround began with deal to buy Alliance Boots.  Then they got involved (cost cutting, tax inversion talks, but they didn't actually do the latter).  QCOM: Bloated costs, board with no owner orientation, family in positions, issuing a lot of stock.  He tries to downplay the breakup idea (tech analysts say it can't be done).  He says they need to return capital; doing a $15B repurchase, which is 13% of market cap (says they have 30 per share in cash).  He wants to cut/change management compensation, reduce board size, evaluate corporate structure (break off the chipset business).  Smartphone market is large and growing, IP model approved by China (although many OEMs still not paying royalties).  For more from this manager, we recently posted Rosenstein's appearance on Wall Street Week.


- Keith Meister (Corvex Capital): Long Yum Brands (YUM).  1/3 in China, outside of that it's almost all franchise, inside it's owned.  KFC, Taco Bell, Pizza Hut restaurants.  Says China problems are being fixed.  Top 5 holder of the stock.  Says franchise mix leads to more leverage, better multiples.  Simply put it's a bet on recovery in China (previous food issues at KFC).  SSS getting better, but still negative.  51% of those surveyed in China said KFC was their favorite place to eat.  Today 0.97 of $2.09 in earnings is China.  If they go back to '12 rev/unit, it would be over $3 EPS from China alone in 2017, that would be about $6 EPS in 207, with stock at $60, paying only about 10x now.  China business is very different - should spin it off.  Have it enter a franchise business deal with the main "FranchiseCo."  Says it unlocks $16/share of value.  ChinaCo becomes "more Chinese" which helps in China.  Valuation: 50-90% upside.  $130-16 PT.  Franchise co worth $88 in 2017, ChinaCo, $41-72 depending on how well it recovers from the food scandals.  Dan Loeb's Third Point also laid out the YUM investment thesis its Q1 letter.


- Larry Robbins (Glenview Capital): Long Abbvie (ABBV) & Brookdale Senior Living (BKD).  Money is cheap now.  BB junk bond 10-12 year debt for less than 4% after tax.  Own over-capitalized businesses and have them borrow money.  ABBV:  Old school pharma to new.  Spending 16% of revenue on R&D.  Structural acquirers and owner-activists pressure them on both sides.  Why ABBV?  1. Growth through 2020, 2. Numerous areas of upside optionality, 3. Excess cash they could use for acquisitions.  Says Humira grows through 2017, acknowledges the debate about patents expiration.  Biosimilars are not exact copies.  6 key upside optionalities: Pipeline is underappreciated, making biosimilars is 1000x harder than generics (state by state regulation, difficult process, etc), Humira patent protection possible, could change formulation of Humira to extend economics, look at Evercore ISI work, paying 30% repatriation tax plus dividend taxes in US "don't give it to us, keep it and do something productive with it", says they could buy 30% of shares with leverage, adding $15 to share price, also could be more M&A "they could be the pill swallowed, or be the Pacman."  Almost a double from here.  BKD: Bet on the aging population.  By far the largest and can sell ancillary services in same facilities.  Also real estate options.  You can also read Robbins' thesis on other stocks in Glenview's recent letter.


- Lee Cooperman (Omega Advisors): 8 stock picks (ACT, AER, C, DOW, GOOGL, GM, PCLN, GULTU).  Generally bullish, 7-9% return on market, appropriately valued, negative view of fixed income.  35% of stocks in SPX yield more than bonds.  Inflation is not bad for stocks - it raises their nominal revenue.  Bear markets occur for one of four reasons: oncoming recession, overvaluation, geopolitical event occurs, hostile Fed.  Nothing today indicates oncoming recession.  He says he doesn't understand the consternation about the Fed hiking rates.  On average, the stock market raised 30 months after the first hike, the shortest was 10 months.  On average, a year later, market is up 9.5% the year after a rate hike.


- Mala Gaonkar (Lone Pine Capital): Long Microsoft (MSFT).  Value hidden in legacy tech.  1.5B installed office users globally, only 250M actually pay for it.  New stronger management (Satya Nadella).  Built the cloud platform Azure. Works with 3rd party software, no more "saving Windows first."  Solid mid-to-high single digit revenue growth.  Most controversial aspect of this pitch.  Fear is consumer Windows will die, but it is only 5% of revenue.  Enterprise software is 17%, and more more sticky.  Mainframes still a $5bn annual business and they are using MSFT software.  "Price elastic market" very stick in ADBE, Autodesk as well.  Cloud is 10% now, growing faster than the rest of the business.  Office 365 more than doubles users.  Reduces piracy.  Operating cost cuts.  Been no restructuring since dawn of PC age.  Spend $1bn marketing consumer Windows.  Cloud shift cuts costs - no commissions to pay resellers.  Capital return, has way too much cash.  Raised share buybacks, but should be much higher.  Could earn 3.89 next year, fro 3.04 this year.


- Jeff Gundlach (DoubleLine Capital): Puerto Rican Muni Bonds.  They have priced in a lot of problems.  Triple tax free yield of 11% for 8s2030 at about 78 of face.  Says they may go lower first. "You're supposed to buy them at 78."  Also talked about negative interest rates and said to borrow infinite amounts at that level.  Fed talk is just noise.  2 year Treasury bottomed 4 years ago - you can see it on the chart.  Same with 10 year - 2012 was the low.  Very bearish on junk bonds, says no one alive in the room has lived through a secular rise in high yield bond yields.  Junk bonds do NOT do well when the Fed starts hiking rates.  A couple of years of runway.  For more from Gundlach, watch his appearance on Wall Street Week.


- David Tepper (Appaloosa Management): Thoughts on markets.  Also said junk bonds are not cheap.  "Something has to give."  "Either stocks have to go up a hell of a lot, or treasuries will go down a hell of a lot."  Could 22.78 P/E vs average now 17x on stocks.  Implies 30% move if treasuries don't move.  Monetization of debt in China.  "Don't fight the Fed; don't fight 4 feds."  (US, ECB, Japan, China).  Implies Hong Kong stocks are cheap, 10x P/E.  "Maybe the big banks aren't that bad if you look at them."  Don't short options that lengthen (they become more valuable).  This is why it's risky to short China.  What happens when China does first cut?  Stocks start going up.  Reinflation of their economy.  Says terrible environment for bonds.  "This monetary policy has worked for 5 years."  Now all 4 central banks are going one way.  "Good luck" with shorting.


- Bill Ackman (Pershing Square): Long Jarden (JAH), Platform Specialty Products (PAH), and Valeant Pharmaceuticals (VRX).  JAH: 45x return in 14 years, constantly undervalued over the years.  Always valued on next year's EPS.  PAH: A shell they funded.  NOMHF: Nomad, another shell/SPAC.  Flat at cash value for a year, then bought Iglo and the stock went up 80%.  Why is the market mis-valuing these companies?  He calls them "Platform companies" not just on multiples based on comaprables.  Others as examples: Danaher, Liberty Media, AB InBev, Transdigm.  Key is to find the right management teams that do good acquisitions.  VRX: Paid $196/share, 20m shares, 20% of his capital.  Tax-advantaged structure.  Units have autonomy.  Drawback is there is a lot of competition in acquisitions.  Gives the example of the Bausch & Lomb acquisition.  Value of business is correlated with ability to buy companies and integrate them, take synergies.  PT $332, from $223.  Based on organic growth and small deals.  Compares it to a Berkshire Hathaway in the making.  For more from Ackman, check out Pershing Square's presentation from its European investor meeting.


- Ian Bremmer (Eurasia Group):  Geopolitical analyst.  Oil production in the US has reduced our willingness to engage in fights, especially in the Middle East.  "Weaponization of Finance" to use finance to influence behavior.  US may have realized that they spent so much in Iraq and the country still fell apart.  "We will see $100 oil no time soon."  "Likely to see an Iranian deal, which will be another 1.2m barrels a day."  Putin is in a corner.  More Russian cyber attacks against the US.  China - the rise is important.  They are not confronting the US militarily.  Economically China does want to challenge US hegemony.  "Best money the Americans ever spent was the 4% of GDP on the Marshall Plan.  It paid off for decades."  The only country in the world with a cohesive global strategy is not us, it is China.  China does not want to occupy countries.  Some countries will be hedging, and ally with China economically.  Including Germany, South Korea, etc.  For the next 5-10 years, China is more stable than you think.  They will be the world's largest economy, but they will be totalitarian still, and will have a lot of world influence.


- Jay Walker (Founder of Priceline): Black Swan events more likely than ever.  A few people with a few million dollars could wipe out billions in market cap.  "Bioweapons plus drones plus social media."  Risk of economic collapse.



- Sohn Investment Contest Winner (Angelo Martorell, Wharton Student): Long IAC Interactive (IACI).  Owns March.com/Cupid/Tinder, Ask.com, About.com, Vimeo, HomeAdvisor.  $5.9bn EV.  Uses sum of the parts and says market not giving value for Tinder, because there is no revenue, profits.  IACI has all the best dating properties.  "Facebook of dating."  If Tinder was private it would be more than the market cap of entire IACI.  Says 1/4 of millenials won't marry.  "Network of effect."  Tinder premium will give unlimited right swipes, 2.5% of MAUs will pay for it.  $10/month.  Online dating makes it very easy to have an affair.  Tinder will crush Ashley Madison.  You can have dates in places you travel.  Cross-selling - some can go from Match to Tinder and vice versa.  Users spend 77 minutes/day on Tinder versus 40 minutes on Facebook.  Also it's fully integrated with FB.  Valuation?  Says you get Tinder for free with current stock price.



Next Wave Sohn New York 2015

- Snehal Amin (Windacre Partnership): Long PowerFinance


- Didric Cederholm (Lion Point): Ukrainian sovereign bond play (steepeners) & Ally Financial (ALLY)


- Alex Denner (Sarissa Capital): Long Ariad Pharmaceuticals (ARIA)


- Daniel Dreyfus (3G Capital): Long Phillips 66 (PSX)


- David Zorub (BlueMountain): Long Sunrise Communications

Lee Cooperman Trims Pennymac Financial Stake, Exercises Warrants on Aspen Group

Omega Advisors' Lee Cooperman has made two separate filings with the SEC recently.


Trims Pennymac Financial Services Stake

First, Cooperman has submitted a Form 4 regarding his stake in Pennymac Financial Services (PFSI).  Per the filing, Cooperman was out selling 58,100 shares on April 27th and 28th at prices around $18.34.  After the sales, he still has exposure to over 3.3 million PFSI shares.

Per Google Finance, Pennymac Financial is "a specialty financial services firm with a mortgage platform and integrated business focused on the production and servicing of United States residential mortgage loans and the management of investments related to the United States residential mortgage market.."


Exercises Warrants on Aspen Group

Second, Cooperman filed a 13G with the SEC regarding shares of Aspen Group (ASPU).  Per the filing, Cooperman continues to own 9.9% of the company.  However, on April 23rd he exercised warrants yielding him 4 million more shares.

The filing also notes that, "In connection with the exercise of the warrants, the reporting person and the issuer have agreed to waive the 9.99% Blocker contained in the warrant agreement."

Per Google Finance, Aspen Group "offers relevant online education. The Company derives revenue primarily from tuition and fees derived from courses taught by the Company online, as well as from related educational resources that the Company provides to its students, such as access to its online materials and learning management system. The Company’s subsidiary, Aspen University Inc. (Aspen University), delivers education experiences and has served thousands of students."

We've previously detailed other portfolio activity from Lee Cooperman here.

Lee Cooperman Trims Altisource Portfolio Solutions Stake

Omega Advisors' Lee Cooperman has filed a Form 4 with the SEC regarding his position in Altisource Portfolio Solutions (ASPS).  Per the filing, Cooperman has sold around 262,000 shares.

He was selling on March 16th and 17th at weighted average prices of $16.33 and $15.57.  ASPS has since continued to slide lower and currently trades around $12.73.  We've outlined the ASPS situation here previously.

Per Google Finance, Altisource Portfolio Solutions is "a provider of marketplace and transaction solutions for the real estate, mortgage and consumer debt industries. The Company operates through three business segments: Mortgage Services, Financial Services and Technology Services. The Company offers mortgage services, such as Asset management, Insurance services, Residential property valuation, Default management services and Origination management services. Financial Services provide collection and customer relationship management services to debt originators, servicers and the utility and insurance industries. Technology Services provides software applications and technologies that manage the end-to-end lifecycle for residential and commercial mortgage loan servicing, including the automated management and payment of a distributed network of vendors."

We've detailed other recent portfolio activity from Cooperman here.

Lee Cooperman Increases New Senior Investment Group Stake

Lee Cooperman of Omega Advisors has filed a 13G with the SEC regarding his position in New Senior Investment Group (SNR).  Per the filing, Cooperman now owns 5.13% of the company with over 3.4 million shares.

He's increased his holdings by 803,327 shares since the end of the first quarter.  The filing was required due to activity on March 5th.

We've detailed other recent portfolio activity from Cooperman here.

Per Google Finance, New Senior Investment Group is "a real estate investment trust (REIT) with a portfolio of senior housing properties across the United States. The Company’s portfolio is categorized into two segments: Managed Properties, which are operated by property managers as property management agreements and Triple Net Lease Properties, which the Company lease to tenants. The Company’s managed portfolio includes 42 assisted living, memory care and independent living properties and its triple net lease portfolio includes 57 assisted living, memory care, independent living and continuing care retirement communities."

Lee Cooperman Trims SandRidge Energy & New Residential Stakes; Adds to THL Credit

Omega Advisors' Lee Cooperman has filed a myriad of amended 13G's with the SEC as of late.  We covered some of his recent portfolio activity here.  In other recent moves, Cooperman was out trimming 2 stakes, and adding to another.


Trims SandRidge Energy

First, Omega Advisors has reduced its position in SandRidge Energy (SD) by over 13.3 million shares since the end of the third quarter.  Per the 13G filed with the SEC, Cooperman now owns just over 32.1 million shares.  This was made due to activity on December 31st.

Per Google Finance, SandRidge Energy is "an oil and natural gas company. The Company focuses on exploration and production activities in the Mid-Continent region of the United States. The Company also operates businesses and infrastructure systems, including gas gathering and processing facilities, marketing operations, a saltwater disposal system, an electrical transmission system and a drilling rig and related oil field services business."


Cuts New Residential Stake

Next, the hedge fund manager also cut his exposure to New Residentail Investment Corp (NRZ).  After selling over 3.8 million shares, he's left owning over 7.97 million shares.  The filing was also made due to activity on December 31st.

Per Google Finance, New Residential Investment Corp is "a real estate investment trust. The Company focuses on investing in, and actively managing, investments related to residential real estate. The Company is managed by an affiliate of Fortress Investment Group LLC, a global investment management. The Company primarily target investments in excess mortgage servicing rights, residential mortgage backed securities, residential mortgage loans and other related investments."


Adds To THL Credit Position

Last, Cooperman also disclosed he has added to his THL Credit (TCRD) position.  After buying over 1.1 million more shares, he now owns over 2.11 million shares of the company.  The 13G was filed due to activity on December 31st.

Per Google Finance, THL Credit is "a non-diversified, closed-end management investment company. It operates as a business development company. The Company’s investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated debt and equity securities of middle market companies. The Company is a direct lender to middle market companies and invest in subordinated, or mezzanine, debt and second lien secured debt, which may include an associated equity component such as warrants, preferred stock or other similar securities."

Don't forget you can see the rest of Cooperman's recent portfolio activity here.