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Billionaire Steve Cohen’s High Conviction Ideas

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Point72 Asset Management is a family office founded in 2014 by Steven Cohen, who previously ran the hedge fund SAC Capital Advisors. Mr. Cohen’s family office administers the assets of its founder and certain eligible employees, and focuses primarily on discretionary long/short equities. As of December 31, the firm held an equity portfolio valued at $12.12 billion and consisting of 665 positions. Insider Monkey projects the stock performance of investment firms using the weighted average returns from their long positions in companies with market caps above $1.0 billion, based on the size of those positions at the beginning of each quarter. According to our calculations, Point72’s 562 qualifying positions as of the end of the third quarter returned about 4.5% during the fourth quarter of 2015, while we calculated his full 2015 returns as coming in at a loss of 5.8%.

The smart money sentiment is an important metric that can be used to assess the long-term profitability of a stock. While there are thousands of stocks trading daily on the market, taking a look at what hedge funds think about certain companies can narrow down the search significantly. At Insider Monkey, we track more than 700 hedge funds, whose 13F filings we analyze as part of our small-cap strategy (read more details here).

Steve Cohen
Steve Cohen
Point72 Asset Management

Back to Point72’s 13F, let’s take a look at the firm’s high conviction ideas, beginning with…

Facebook Inc (NASDAQ:FB)

– Shares Owned by Point72 (as of December 31): 1.28 Million

– Value of Holding (as of December 31): $134.05 Million

Firstly, there’s Facebook Inc (NASDAQ:FB), in which Point72 increased its stake in by 60% over the fourth quarter. Another fund that seemed particularly bullish on the social media behemoth was Arrowstreet Capital, the firm founded by Peter Rathjens, Bruce Clarke, and Harvard professor John Campbell. Between October and December, the fund acquired 4.36 million shares, taking its holding in the company to 4.57 million shares. Over the same period, the stock gained 16.4%, though shares were close to flat in 2016 after the 3.5% gains they enjoyed in Wednesday trading, probably driven by news that Facebook Inc (NASDAQ:FB) would open up Instant Articles to all users as of April 12.

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Nike Inc (NYSE:NKE)

– Shares Owned by Point72 (as of December 31): 2.62 Million

– Value of Holding (as of December 31): $164.35 Million

After a large increase in its stake and a 2:1 stock split by the company during the fourth quarter, Point72’s position in Nike Inc (NYSE:NKE) jumped to 2.62 million shares. On Wednesday, Nike Inc (NYSE:NKE) terminated its contract with Manny Pacquiao, after he said gay couples are “worse than animals.” In a statement, the company assured that: “We find Manny Pacquiao’s comments abhorrent. Nike strongly opposes discrimination of any kinds and has a long history of supporting and standing up for the rights of the LGBT community… We no longer have a relationship with Manny Pacquiao.” Shares of the company were up by more than 0.5% in Wednesday trading. Nike also counts the support of Alex Snow’s Lansdowne Partners, which held more than 16.45 million shares of the athletic apparel company by the end of the fourth quarter.

On the next page we will take a look into three more conviction ideas of Mr. Cohen’s.

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