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Omega Advisors 4Q13 positions: A guide to Cooperman's investments

Part 3
Omega Advisors 4Q13 positions: A guide to Cooperman's investments (Part 3 of 8)

Cooperman’s Omega Advisors establishes a new position in SunEdison

Omega Advisors and SunEdison

Omega Advisors Inc. is a New York–based investment advisory firm founded in 1991 by Leon G. Cooperman. The firm’s 4Q13 purchases include Gaming and Leisure Properties (GLPI), SunEdison Inc. (SUNE), T-Mobile US Inc. (TMUS), and Cameron International Corp. (CAM). Its sales include Polycom (PLCM) and Atmel Corp. (ATML).

Omega Advisors initiated a new 1.50% position in SunEdison Inc (SUNE). SunEdison is a major developer and seller of photovoltaic energy solutions and a global leader in the development, manufacture, and sale of silicon wafers to the semiconductor industry.

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SunEdison said its 4Q net loss widened to $286.4 million or $1.07 per share from $11.8 million or $0.05 per share in the same quarter last year. Net sales for the quarter declined 8%, to $551.2 million from $600.7 million in the prior-year quarter. Solar Energy segment GAAP revenue was lower year-over-year and sequentially—primarily due to the company’s decision to retain 127 MW of solar projects on its balance sheet. The company said the solar pipeline grew sequentially despite significantly higher project completions in the quarter. Lower revenue in the Semiconductor Materials segment was due to lower volumes and continued pricing pressures, influenced primarily by industry-related weakness.

At its recent Capital Markets Day, SunEdison said it expects to complete 135MW to 165MW of solar systems in 1Q. For the whole of 2014, SunEdison expects to complete 900MW to 1,150MW of systems.

The company submitted a draft registration to the SEC relating to the proposed initial public offering of the common stock of a yield vehicle. This “yieldco vehicle” will own and operate solar assets. CFO Brian Wuebbels told Reuters last year that SunEdison could raise up to $300 million from the IPO to fund new projects. Wuebbels added that the unit will include projects in the United States, Canada, Mexico, Chile, the United Kingdom, and Japan, and he expects to have $40 million to $60 million of distributable cash flow. The yieldco owns and operates solar assets under long-term power-purchase agreements with utilities that would guarantee investors regular interest payments. According to pv-tech, the IRR of the yieldco would be in the area of 6% per annum or higher due to the low-risk investment conditions now granted to PV power plants.

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SunEdison last year filed to spin off its semiconductor materials unit, SunEdison Semiconductor, via an up-to-$250 million IPO.

A Morgan Stanley analyst said in a note, “Yield Cos trade at premium valuations given predictable and growing cash flows. The vehicle will offer a low capital cost that and can purchase projects on an accretive basis over time.”

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