Leon Cooperman is among the Wall Street legends many investors follow closely. His impressive performance as a Goldman Sachs (NYSE:GS) running the company’s asset management division was followed by the founding of his very own hedge fund, Omega Advisors in 1991. This hedge fund posted strong performance, but Cooperman closed the fund in 2018, choosing to focus on shifting his assets to his charitable foundation with a plan to give away most of his wealth. However, given his long-term investing style and his nose for value, many investors still follow his trades closely. 

Of late, Cooperman has expressed a cautious view on the U.S. economy, suggesting that an unraveling of the currently unsustainable system could be in order. Additionally, he views very little in the market as undervalued, given where interest rates are, and considers these high interest rates a risk in the near-term.

With this in mind, let’s dive into his top three holdings, and see what we can glean from his picks.

Key Points About This Article:

• Leon Cooperman is considered to be one of the greatest long-term value investors, with many following his trades closely.
• His top three holdings are certainly compelling picks for investors with a more defensive, value-oriented tilt, and are worth examining.
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Mr. Cooper (COOP)

Mr Cooper (NASDAQ:COOP) is a top non-bank servicer of residential mortgages, focused on the U.S. market. This is a stock that has been on an incredible run over the past five years, up nearly 800% over this time frame. Accordingly, it’s undoubtedly been a great pick for Cooperman, and one investors riding his coattails are likely happy to have added.

The stock recently reached a new all-time high, reflecting strong confidence in the company from the market amid its strong performance. Mr. Cooper is a beneficiary of the Federal Reserve’s 0.5% rate cut, as the company’s valuation is closely tied to the strength of the housing market. Expectations that lower rates could spur refinancing activity and greater buying activity has investors taking a bullish tilt on this company and the housing sector overall.

Impressively, Cooperman’s average base cost of his COOP stock investment is around $12 per share, and with the stock now approaching $100, this is a very decent return over just a few years. His stake in the mortgage servicing company is worth nearly a quarter billion dollars, and he’s the company’s third largest investor.

For those looking for a high conviction pick from one of the greatest value investors of our generation, this is one to certainly dive into.

Energy Transfer (ET)

Energy Transfer (NYSE:ET) is a leading U.S. energy midstream provider, and is the kind of “boring” company investors like Cooperman prefer. The company’s pipeline network serves 185 power plants. Thus, this stock can be viewed as a play on energy independence in North America. 

Energy Transfer has clearly capitalized on rising gas demand, securing deals for an additional 500,000 MMBtu/d over the past two years. The company aims to expand its reach further, supplying over 1 Bcf/d to connected plants and pursuing new connections totaling over 5 Bcf/d. Discussions with data centers for 3 Bcf/d are also underway. Such deals would enable Energy Transfer to optimize existing capacity and expand gas gathering and processing capabilities further. 

Importantly, Energy Transfer hasn’t sat on its hands when it comes to the competition either. The company has continued to consolidate this space, completing two major acquisitions last year. The company’s acquisition of Lotus Midstream for $1.5 billion was finalized in May and its $7.1 billion merger with Crestwood Equity Partners closed in November.

Vertiv (VRT)

Vertiv Holdings (NYSE:VRT) is another stock that’s surged on Leon Cooperman’s watch, having surged around 200% over the past three years as the company has continued to benefit from increasing demand for digital infrastructure in IoT and cloud computing, Unsurprisingly, the company’s growth accelerated with the rise of AI technologies. However, unlike many AI stocks with little in the way of meaningful top and bottom line impacts from the rise of AI, it’s quit the opposite from Vertiv, which has seen its Q2  adjusted free cash flow surged to $333 million with a net leverage ratio of 1.8-times.

The company raised its guidance for sales, operating profit and free cash flow as a result of these numbers. Additionally, Vertiv’s management team highlighted a high likelihood of this momentum continuing, as AI advancements take hold in a number of key sectors.

With 13% organic growth, many investors (like Cooperman) believe Vertiv is well-positioned to see continued success. I tend to agree. So long as the company can continue to benefit from increased R&D and expansion initiatives in the data center space, this is a stock to buy and hold for the long-term. I think Cooperman has a good one with Vertiv.

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