Lee Cooperman’s Top Hedge Against The Massive Inflation He Expect

The 77 years old living legend has turned his hedge fund into a family office in 2018, saying I can’t chase S&P 500 for the rest of my life. Cooperman’s hedge fund Omega Advisors have generated more than 12% annualized returns since inception through 2018.

He worked for Goldman Sachs for 25 years before establishing Omega Advisors in 1991. The billionaire investor has recently expressed concerns over the rising US debt on a TV show. Meanwhile, Cooperman also expressed confidence in gold markets for the first time in his investing career. The gold price has hit new record levels in 2020, thanks to investors’ move towards safe-haven assets in the wake of pandemic and concerns over the US dollar value depreciation.

“I bought gold for the first time in my life. I understand the case for gold. We’re on the way to some banana republic situation. Nobody’s worrying about the debt that’s being created.”

The investing guru particularly focuses on the fundamentals of companies when making buying or selling decisions. His investment philosophy has also been concentrated on macro trends.

The billionaire legend has kept investments in energy companies despite historic down cycles in 2020 amid pandemic and slowing demand. Cooperman claims that oil prices will trade around $60 a barrel.

The legendary investor also believes in market trends. He sold old-fashioned banking giant JP Morgan’s (NYSE: JPM) stake in the latest quarter, according to 13F filings. However, Leon Cooperman has expressed strong confidence in the emerging financial services technology providers like Fiserv (NASDAQ: FISV) and Mr. Cooper Group Inc (NASDAQ: COOP). The legendary investor has also been enhancing stakes in the fastest growing technology and communication sector.

Lee Cooperman’s 5 Favorite Stocks Heading Into 2021.

1. Fiserv, Inc. (NASDAQ:FISV)
Financial services technology company Fiserv, Inc. (NASDAQ: FISV) is the largest stock holding of Omega Advisors family office portfolio. It is holding 1 million shares of Fiserv valued at $106 million, accounting for 10.44% of the overall portfolio.

Shares of Fiserv underperformed in 2020, but market analysts believe it is one of the best ways to play the secular shift toward electronic payments. The company has generated 21% revenue growth in the September quarter.

2. Mr. Cooper Group Inc. (NASDAQ:COOP)
The billionaire investor has raised its stake by 12% in Mr. Cooper Group Inc. (NASDAQ: COOP) in the third quarter. It is the second-largest stock holding of Omega Advisors family office portfolio, accounting for 10.21% of the overall portfolio.

Shares of Mr. Cooper Group soared 145% in the last twelve months.

3. Alphabet Inc (NASDAQ:GOOGL)
Alphabet Inc (NASDAQ: AAPL) is the third-largest stock holding of Omega Advisors. It is one of the billionaire Lee Cooperman’s favorite stocks heading into 2021 because the legendary investor bought 60,000 shares of Alphabet in the latest quarter.

Shares of Alphabet soared almost 29% in the last twelve months, extending the five years gains to 126%. Although the internet company underperformed this year compared to other FAANG stocks, the market analysts expect upside ahead amid prospects for recovery in the pandemic hit businesses – which will enhance its ads revenues. The company’s ad revenue from the traveling and tourism industries fell sharply this year.

4. Cigna Corporation (NYSE:CI)
The health insurance provider Cigna Corporation (NYSE: CI) is the fourth largest stock holding of Omega Advisors family office portfolio. Although Omega sold 22% of the stake in the latest quarter, the health insurance provider still accounts for 7.08% of the overall portfolio.

Hedge funds are less optimistic about Cigna’s performance. The number of bullish hedge fund bets retreated by 10 in recent months. Cigna Corporation was in 62 hedge funds’ portfolios at the end of September relative to an all-time high of 76.

Meanwhile, Avenir Capital looks bullish on the future fundamentals of the healthcare insurance company. Here is what Avenir Capital stated about Cigna in a shareholder letter:

“While we generally don’t comment on current quarter events in these letters, given the timing and significance of the U.S. election, it is, perhaps, worth pointing out that Cigna’s share price jumped 15% the day after the election. We think the probability of dramatically unfavourable policy outcomes is low and prefer to hold this proven compounder through the volatility.”

5. Trinity Industries, Inc. (NYSE:TRN)
The rail transportation products and services provider Trinity Industries, Inc. (NYSE: TRN) is one of the billionaire Lee Cooperman’s favorite stocks heading into 2021. The legendary investor first initiated a position in Trinity in 2017 and the firm has raised its stake by 6% in the latest quarter. It is the fifth-largest stock holding of the Omega family office portfolio.

Shares of Trinity Industries rallied almost 16% in 2020. In addition, the company also offers a hefty dividend yield of 3.16%. It has raised dividends in the past ten consecutive years, while the average dividend growth rate stood around 20% in the past five years.

6. Ashland Global Holdings Inc. (NYSE:ASH)
The specialty chemical provider Ashland Global Holdings Inc. (NYSE: ASH) is the long-running investment of billionaire Lee Cooperman. The firm first initiated a position in Ashland in 2014 while the Cooperman family office added to its existing position in the latest quarter. It is the sixth-largest stock holding of the Omega family office portfolio.