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Billionaire Steve Cohen Aggressively Bought These 5 Stocks In Q3

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Steve Cohen built a strong reputation and personal fortune for himself while managing hedge fund S.A.C Capital Advisors from 1992 until early 2014, when the fund was converted into the family office Point72 Asset Management. Even though Cohen no longer manages outside money, given his strong track record, his stock picks are still carefully monitored. While many other investors were exhibiting caution during the brutal third quarter, Cohen was aggressive, opening 300 new positions and adding a net 41 stocks to his firm’s equity portfolio. In this article we’ll look at five of the stocks that Cohen was buying the most during the third quarter and judge the factors that may have prompted his purchases.


We’ll start with Lululemon Athletica inc. (NASDAQ:LULU), the Canadian yoga apparel company which was enjoying a solid year until early September, when its second quarter results heavily disappointed investors. Shares plunged by 16% on September 10 despite an earnings beat, and drifted down by another 5% over the rest of September, which may have given Cohen a purchase price he liked, as he bought 2.85 million shares during the quarter, adding them to a holding that had previously contained just 35,000 shares. The purchase elevated Lululemon Athletica inc. (NASDAQ:LULU) to the fourth-most valuable long position in Cohen’s equity portfolio, worth over $146 million. Cohen isn’t alone in his feelings about the stock; both Citigroup Inc (NYSE:C) and MKM Partners recently ranked Lululemon as a top retail stock to buy. It ranked as Citi’s top retail pick, while MKM Partners put a $69 price target on the stock, which suggests 50% upside potential. 12.60% of Lululemon Athletica inc. (NASDAQ:LULU)’s shares were held by the investors in our database at the end of the third quarter.

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Eli Lilly and Co (NYSE:LLY) was the largest new long position added to Cohen’s portfolio in the third quarter, comprising 1.47 million shares worth $123 million. Shares are up by 25% this year, but are down slightly in the fourth quarter, having fallen by over 7% on October 12 after it announced the discontinuation of evacetrapib, a cardiovascular treatment in late-stage trials in the U.S, Europe, and Japan. Eli Lilly and Co (NYSE:LLY) gave up on the treatment at the recommendation of an independent committee, due to its low probability of success. After falling even further later in the month, shares have since made up most of the losses. Eli Lilly was recently upgraded to ‘Outperform’ from ‘Market Perform’ by BMO Capital Markets, in addition to having its price target bumped up to $100 from $90, which represents upside of 20%. Billionaire Ken Griffin owns 4.14 million shares of Eli Lilly and Co (NYSE:LLY), having bought 2.87 million shares during the third quarter.

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Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole; yet investors have been stuck (until now) investing in all of a hedge fund’s stocks: the good, the bad, and the ugly. Why pay fees to invest in both the best and worst ideas of a particular hedge fund when you can simply mimic the best ideas of the best fund managers on your own? These top small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Even better, since the beginning of forward testing at the end of August 2012, the strategy worked just as our research predicted and then some, outperforming the market every year and returning 102% over the last 38 months, which is more than 53 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).

Steve Cohen
Steve Cohen
Point72 Asset Management

Three more stocks Cohen couldn’t get enough of in the third quarter are revealed on page two.

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