A Look At Billionaire Steve Cohen’s Top New Bets

You may like Steve Cohen or you may not like Steve Cohen but he is really one of the greatest hedge fund managers of all time. He had a stellar reputation till he got embroiled in an insider trading case. Though Steve Cohen had to shut down his hedge fund after paying a $1.8 billion fine, he has invested his own money in a family office – Point72 Asset Management. His family office has given strong returns since inception, keeping the reputation of Mr.Cohen as a great investor intact. Point72 Asset Management currently manages assets worth more than $14.2 billion. The fund bought positions in 262 new stocks during the third quarter, while making additional purchases in 180 stocks. The financial and consumer discretionary sectors are the top holdings of Steve’s fund. Alphabet Inc. (NASDAQ:GOOGL) was the top buy for the fund during the quarter ending September, while it sold a large position in Amazon.com, Inc. (NASDAQ:AMZN). We look at some of the top positions of Points 72 Asset Management in the article below.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Point72 Asset Management bought 419,288 shares of Alphabet Inc. (NASDAQ:GOOGL) worth more than $337 million during the third quarter. This made the stock its 3^rd largest holding, comprising 2.37% of the total portfolio value. Alphabet Inc.’s (NASDAQ:GOOGL) performance over the last year was flat. The company is a massive cash generating machine showing revenues of $46.5 billion and a net income of $9 billion. Analysts seem to agree with the bullish stance of Point72 Asset Management as 35 out of the 41 analysts covering this stock think it as a “buy”. The company is expected to show a full year EPS of $34.59 in 2016, which is up almost 20% from last year. The value of hedge fund holding in the stock also increased by 28% during the third quarter.

Comcast Corporation (NASDAQ:CMCSA) was another major new position taken by the fund in the third quarter. Point72 Asset Management bought 2 million shares of this media giant and it made up nearly 1% of the fund’s portfolio at the end of the third quarter. The stock has been performing well over the last one month, gaining 6% and is currently trading very near to its 52 week high price. Despite a P/E ratio of 20x, the company gives a good dividend yield of 1.6%. Comcast Corporation (NASDAQ:CMCSA) recently selected two new TV channels Primo TV and Kids Central to be broadcast through its cable TV network to meet the needs of its Hispanic audience. The company remains highly profitable showing an operating margin of 20% and return of equity of 16.8% during the last quarter. As per our records, the number of funds having this stock in its portfolio declined to 83 in the third quarter from 88 in the quarter earlier.

McDonald’s Corporation (NYSE:MCD) was the biggest consumer discretionary buy for the fund during the third quarter. Steve Cohen’s fund bought $67.6 million worth of this stock and it comprised of 0.46% of the total portfolio at the end of quarter three. McDonald’s Corporation (NYSE:MCD) owns one of the most famous Quick Service Restaurants (QSR) brands in the world, with operations across more than 120 countries. The company franchises out most of the restaurants keeping ownership of just 1/5^th of the McDonald’s restaurants. The stock has a market capitalization of $100 billion and gives a dividend yield north of 3%. Stephen J. Easterbrook is the CEO of the company and heads over 420,000 employees. At te end of September, 55 funds that we track held shares worth $2.77 billion of this company.

Though Point72 Asset Management showed a bullish inclination towards McDonald’s Corporation (NYSE:MCD), it was bearish on Procter & Gamble Co. (NYSE:PG). The fund bought 75,000 put options of the stock valued at $67 million during the third quarter. Procter & Gamble Co. (NYSE:PG) has been trading in a narrow range over the last one year and currently has a market value of $221 billion. The company gives a solid dividend yield of 3.2%, despite showing a declining sales growth over the last one year. The company’s core earnings also declined by 2% making the management announce a $10 billion cost cutting program. The management wants to plough the savings from the program into R&D initiatives which will ensure higher growth in the future. At the end of the third quarter, the aggregate value of hedge fund holding in Procter & Gamble Co. (NYSE:PG) increased by a whopping 262% to more than $20 billion.

AMETEK, Inc. (NYSE:AME) is a major industrial manufacturer of electronic instruments and electromechanical devices. This was another big bet that Point72 Asset Management made during the third quarter, buying $65.9 million of this stock. The fund bought 750,000 shares of this company which now makes up 0.46% of the fund’s total portfolio value. The company reported tepid third quarter results, with revenues falling by 5% quarter on quarter to $945 million and earnings declining by 14% during the same period. The company expects to generate $2.3 in earnings for 2016, which gives it a P/E of approximately 20x. The company made an entry into the laser fabrication market for the medical devices market by acquiring privately held Laserage Techonolgy Corporation. The number of funds holding this stock as per our records inched up to 29 from 25 in the second quarter.

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