Steve Cohen runs his family office Point72 Asset Management since being forced to close his hedge fund after falling foul with the SEC. The billionaire’s insider trading related troubles didn’t stop him from becoming the third highest earning hedge fund manager in 2016 according to Forbes. His hedge fund and family office has generated one of the strongest returns since its inception in early 90s and this isn’t all due to illegally obtained insider tips. Point72 Asset Management has its largest allocation towards the consumer discretionary sector, closely followed by energy and healthcare industries. The fund had a value of more than $14 billion in terms of its 13F positions. Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc. (NASDAQ:FB) were the top buys of the fund during the third quarter. We take a look at some of fund’s top holdings which have also seen big insider purchases. Tracking the purchases made by insiders of a company can help in taking more intelligent actions as they have the best information about their company’s progress.
To be clear, the stocks we will be discussing in this article have seen legal insider purchases disclosed through the SEC’s website over the last 6 months or so.
Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).
Point72 Asset Management bought 244,786 of Zoetis Inc (NYSE:ZTS) shares during the third quarter. The fund holds shares worth $241 million at the end of September. Michael Mccallister, director at Zoetis Inc (NYSE:ZTS) bought 2000 shares at $51.34 each in September. The stock has returned more than 4% over the last one year and is trading 7% above its 52 week average price. Zoetis Inc (NYSE:ZTS) has an average analyst rating of overweight. This animal medicine and vaccine company posted a healthy operating margin of 26.75% for its quarter ending October results. The EPS saw sharp growth to $0.48 per share as compared to $0.38 per share posted in the year ago quarter. The number of other hedge funds tracked by us having a position in Zoetis Inc (NYSE:ZTS) declined slightly to 44 in the third quarter from 46 in the quarter earlier. The corresponding value of their holdings also came down by 25% to $2.24 billion during the July-September period.