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Leon Cooperman is an experienced hedge fund manager. The once CEO of Goldman Sachs Asset Management founded the prominent hedge fund Omega Advisors in 1991, after 25 years and has been managing it ever since. Of course, that’s not to say the man is infallible. Since June 30, 2011, his top stock picks have underperformed the market by 4%, producing a negative 13% return compared with the S&P 500’s (SPY) -9% return. The culprit? Many of his larger holdings are producing negative returns.

Company

Ticker

Value (x1000)

Activity

Return

APPLE INC COM

AAPL

23271

1%

8.35%

EXXON MOBIL CORP

XOM

17771

-24%

-15.86%

INTL BUSINESS MACHINES

IBM

15816

25%

0.12%

AMAZON.COM INC

AMZN

15094

1%

-5.07%

PROCTER & GAMBLE CO

PG

14406

-3%

-4.49%

DOW CHEMICAL

DOW

12837

-7%

-21.89%

VERIZON

VZ

12422

2%

-6.69%

UNITED PARCEL SERVICE

UPS

12033

58%

-15%

SALESFORCE.COM INC

CRM

11764

NEW

-13.93%

EXPRESS SCRIPTS INC

ESRX

11509

78%

-16.47%

MCKESSON CORP

MCK

11282

NEW

-12.16%

PRECISION CASTPARTS

PCP

11010

0%

-11.33%

GOLDMAN SACHS

GS

10499

-9%

-17.09%

JOHNSON CONTROLS

JCI

9814

89%

-23.55%

NORTHEAST UTILITIES

NU

9125

4%

-9.21%

CONOCOPHILLIPS

COP

8875

-6%

-13.38%

HOME DEPOT INC

HD

8419

116%

-21.29%

ONEOK INC

OKE

8256

-1%

-13.53%

MEDCO HEALTH SOL

MHS

8223

10%

-7.96%

BANK OF AMERICA

BAC

8114

-8%

-38.23%

EL PASO CORP

EP

7444

71%

-13.02%

COLGATE-PALMOLIVE

CL

7373

-5%

-7.67%

CONSOLIDATED EDISON

ED

7312

NEW

-2.20%

GENERAL ELECTRIC

GE

7071

NEW

-19.99%

EQUIFAX INC

EFX

7002

16%

-14.92%

Of Cooperman’s top 25 stock picks, only 2 have produced positive returns since the end of June 2011. Apple Inc (AAPL) returned 8.35% and IBM returned a paltry 0.12%. These stocks’ better-than-average returns this year were enough to entice Cooperman to increase his position in both companies, but the question remains whether it will be too late to bolster Omega Advisors’ average return.

Cooperman’s largest losses were in finance stocks, losing 38.23% via his Bank of America Corp (BAC) position and 17.09% in his Goldman Sachs Group Inc (GS) position. He reduced these holdings modestly during the second quarter but that wasn’t enough to protect his portfolio from big losses. Finance stocks are notoriously low right now and many hedge fund investors are snapping them up in the hopes that they will be able to make a tidy fortune when the stocks rebound. Perhaps Cooperman bought a position in these stocks a little early but they will come back up as the economy improves.

However, that doesn’t explain away the other losses. Cooperman also sustained severe losses in companies like Johnson Controls Inc (JCI), losing 23.6%, Dow Chemical (DOW), losing 21.9%, and Home Depot Inc (HD), losing 21.3%. Hopes for these companies may be high; Viking Global’s Andreas Halvorsen is a fan of Johnson Controls (Check out what he has to say here) and Thomas Steyer’s Farallon Capital (the 14th largest hedge fund in the world) has made a small fortune through his position in Home Depot. It seems like Cooperman may be on the losing end of things at least for awhile.

We like Cooperman; after all, he is a seasoned hedge fund manager. Mirroring his positions now could be a way to buy in while the market is low. Cooperman may be producing negative returns so far but if you buy in now, and his top stock picks trend up, you have much to gain. Cooperman estimates that his stock choices should garner at least an 8% return in 2011, a far cry from his current performance. There are still several months left in 2011 for Cooperman to turn this around; the question is whether the market will become bullish toward the end of the year. Most investors will find the risk is too great.


Disclosure: I am long COP.

Source: Billionare Leon Cooperman's Top 25 Stock Picks