Leon Cooperman (Trades, Portfolio) is the founder and chairman of Omega Advisors, a hedge fund with approximately $6 billion under management. Mr. Cooperman was the CEO and Chairman of Goldman Sachs Asset Management and was 24 years old when he first entered the company. He worked at Goldman Sachs for 25 years. In 1991, he left Goldman and started Omega Advisors. He was a graduate of Columbia Business School. In 1991, Mr. Cooper founded Omega Advisors with $450 million in capital. He combines his macro view and fundamental valuation in his investing strategy. He does try to predict the market direction and pays close attention to valuations, too.
According to Guru Focus Undervalued Stocks in Cooperman’s portfolio, the following are the four stocks with better margins of safety.
1) Apple Inc. (AAPL)
Cooperman started to buy AAPL in Q3 of the year 2010. Ă‚ He is currently holding 1,191,790 shares purchased at an average price of $85/share, with an average positive return of 50%.
At current price, based on DCF model, Apple's fair value is $211.23. The stock is trading at a margin of safety of 40%, at a P/E ratio of 17.10 and P/B ratio of 6.00. The current price is hitting the all-time highs.
The Peter Lynch Fair Value is set to $185.80 with a margin of safety of 45%
Over the last 5 years the company's revenue grew by 30.10% and EPS growth rate is 29.10%. Apple has top ratios of the Consumer Electronics industry (36.70% of ROE, 19.37% of ROA and 332% of ROC) and strong a Financial situation, rated 8/10.
Ă‚ Gurus holding AAPL are Carl Icahn (0.91% of Outstanding Shares), Jeremy Grantham (0.45% of Outstanding Shares) and Ken Fisher (0.18% of Outstanding Shares)
2) Denbury Resources Inc. (DNR)
Cooperman purchased DNR during Q2 of 2010. Ă‚ He is currently holding 3,787,907 shares at an average price of $16/share. Cooperman averaged down until 2014Q3 and now he is facing a negative return of 49%.
At current price, based on DCF model, DNR fair value is $15.19, and these days the stock is trading with a margin of safety of 43%, at a P/E ratio of 8.40 and P/B ratio of 0.57.
The Peter Lynch Fair Value is set to $20.05 with a margin of safety of 131%
Over the last 5 years, the company Revenue grew by 16.00%. While EPS didn’t grow, the Book Value grew by 16.70%. Denbury has good ratios compared to other companies of the Oil & Gas EP industry (7% of ROE, 3% of ROA and 8% of ROC) that is better than 83% of its competitors. The Financial situation is rated 6/10.
Cooperman is the main Guru holding DNR with 1.07% of Outstanding Shares, followed by Jim Simons (0.48% of Outstanding Shares) and Ray Dalio (0.46% of Outstanding Shares).
3) Eastman Chemical Co (EMN)
Cooperman bought EMN diring Q2 of 2012. He is now holding 1,593,835 shares at an average price of $63.26/share. Cooperman's return is at 20%
At current price, based on DCF model, DNR fair value is $85.21, and the stock is currently trading with a margin of safety of 11%, at a P/E ratio of 10.70 and P/B ratio of 2.88.
The Peter Lynch Fair Value is set to $166.38 with a margin of safety of 120%
Over the last 5 years, the company's revenue grew by 18.30%, EPS grew by 48.50% and the Book Value grew by 25.20%. EMN's ratios are better than 90% of other companies of the Global Chemicals industry (23% of ROE, 7% of ROA and 24% of ROC). The Financial situation is rated 7/10 and is not in good shape compared to history.
The main Guru holding EMN is Jean-Marie Eveillard (1.29% of Outstanding Shares). Cooperman is in second position, holding 1.07% of Outstanding Shares, followed by Diamond Hill Capital with 0.62%.
