With around five decades of stock-picking experience and billions to his name, Leon Cooperman is one stock-picking expert it pays to listen to.
Cooperman currently runs Omega Advisors, a hedge fund based in New York City, and one of the fund’s biggest bets is Monitise (LSE: MONI).
Bright prospects
Omega Advisors owns around 15% of Monitise and has been averaging down over the past 12 months.
Leon Cooperman believes that Monitise has some serious potential. He notes that the company has been working hard to build a strong relationship with big banks and other non-financial institutions since the beginning, and these relationships could prove to be extremely valuable.
In particular, Cooperman believes that banks’ desire to develop their own payment platforms, separate to those offered by the likes of Apple, could create opportunities for Monitise.
Nonetheless, Cooperman has acknowledged that Monitise might have lost its way. However, he has confidence in the mobile payment firm’s switch from a one-time license fee business model to a subscription-based model. Adobe Systems made a similar move several years ago, and the group has reported strong growth since.
Will take time
Leon Cooperman believes that Monitise will succeed over the long term. But the company’s short-term prospects are more uncertain.
Indeed, Monitise’s new CEO, Elizabeth Buse, has plenty of work to do before the company’s prospects start to improve. The good news is that, unlike her predecessor Alastair Lukies, Elizabeth has a wealth of experience in the mobile payments industry, having worked at Visa for 16 years.
Still, Monitise has repeatedly missed expectations and disappointed investors over the past few years. And with this in mind, it’s going to be difficult to trust the company until there’s solid evidence that things are starting to turn around. Rebuilding investor trust should be a priority for Elizabeth Buse.
The company has stated several times over the past year that it is on track to hit its full-year, 2016 EBITDA profitability target. If Monitise can reach this target, it will be the first step towards rebuilding investor trust.
Top small cap
Overall, Monitise has the potential to make it big. But the company needs to show that it can be trusted again before investors take the plunge.
What’s more, Leon Cooperman may well believe that Monitise will be a success — but at current prices Monitise only accounts for 2% of his fund.
Clearly, Cooperman isn’t willing to bet everything on Monitise’s recovery just yet.
