Why These Billionaire Steve Cohen Picks Deserve Your Attention

The secret to getting the most out the hedge fund industry for profits is to filter out the noise and focus on selected sides of the smart money’s portfolios. Our research has shown that hedge funds’ sterling performance in key areas is often lost in the hubbub of their overall underperformance, which is often the result of their hedged positions and losses that come from short positions. For example, the best performing hedge funds’ 30 preferred mid-cap stocks generated a return of 18% in the 12 months ending November 21, while the S&P 500 Index returned about 7.6% in the same period, with more than 51% of the stocks in the index failing to beat the benchmark. Hedge funds have the right resources that help them in pinpointing the stocks that have potential. Therefore mimicking the smart money is always helpful in making investment decisions. What’s more, in the third quarter, out of 659 hedge funds tracked by Insider Monkey, 627 funds, which had at least 5 long positions in companies valued at $1 billion or more, returned 8.3% on average from their long picks, a full 5.0 percentage above S&P 500 ETF returns.

Another example of hedge funds acing the market comes from billionaire Steve Cohen’s Point72 Asset Management, which returned 1.31% per month between 1999-2012 from its positions in small and mid-cap companies, versus S&P 500’s 0.32% a month in the same period. The Connecticut-based hedge fund thus beat the index by 0.99% per month in this period. Having this sterling performance in mind, let’s have a look at Point72 Capital’s top picks in the third quarter in companies with a market cap range of $5 billion-$10 billion.

 Tractor Supply Company (NASDAQ:TSCO)

Point72 Asset Management upped its stake in Tractor Supply Company (NASDAQ:TSCO) by 282% in the third quarter, and ended the quarter with 765,900 shares with a net worth of $51.58 million. Last month, Northcoast Research upgraded Tractor Supply Company (NASDAQ: TSCO) to ‘Buy’ from ‘Neutral’ with a price target of $102. The stock is down over 9% year-to-date. 25 hedge funds tracked by Insider Monkey held positions in Tractor Supply Company (NASDAQ:TSCO) at the end of the third quarter.

 PVH Corp (NYSE:PVH)

Steve Cohen’s family office upped its stake in PVH Corp (NYSE:PVH) by 17% in the third quarter, buying 80,715 new shares of the company, and concluding the period with a total of 552,615 shares with a total value of $61.06 million. Last week, UBS reiterated a ‘Buy’ rating for PVH Corp (NYSE: PVH), and raised its price target to $130.00 from $125.00. Shares of PVH Corp (NYSE:PVH) have gained over 50% in value since the start of the year. D. E. Shaw owns 1.42 million shares of PVH Corp (NYSE:PVH), as of the end of the third quarter.

On the next page, we will discuss some other small and mid cap picks of Steve Cohen.

 Rice Energy Inc (NYSE:RICE)

Point72 acquired over 2.3 million more shares of Rice Energy Inc (NYSE:RICE) in the third quarter, moving into the next one with a total of 2.59 million shares of the gas and oil company. The updated stake has a net worth of $67.66 million. Last month, Deutsche Bank upgraded the company’s rating to ‘Buy’ from ‘Hold’ and increased its price target to $33 from $30.  Rice Energy crushed analysts’ estimates for the third quarter by reporting EPS of $0.39 on $198.9 million revenue, above the projections of $0.02 EPS and $214.12 million revenue. Andreas Halvorsen’s Viking Global owns 14.97 million Rice Energy Inc (NYSE:RICE) shares, according to the latest 13F data.

 Valeant Pharmaceuticals Intl Inc (NYSE:VRX)

Point72 is bullish on Valeant Pharmaceuticals Intl Inc (NYSE:VRX), as the fund upped its stake in the company by 20% in the third quarter, ending the period with 4.62 million shares, with a total value of $113.45 million. Valeant’s stock was briefly battered along with other pharmaceutical stocks following President-Elect Donald Trump’s interview with Time magazine, in which he vowed to bring down drug prices. Shares have recovered since as some investors don’t think Trump will do too much in terms of pricing. The number of elite funds with holdings in Valeant Pharmaceuticals Intl Inc (NYSE:VRX) fell by 2 quarter-over-quarter to 58 at the end of September.

Bunge Ltd (NYSE:BG)

Point72 Asset Management loaded up on Bunge Ltd (NYSE:BG) in the third quarter, buying about 2.72 million shares of the company and boosting its stake in the firm by a whopping 1,471%. The fund moved into the fourth quarter with a total of 2.90 million shares of the New York-based food company. The updated position has a total worth of $171.87 million. Bunge earned $0.79 per share in the third quarter, worse than the Street’s projection of $0.81. A total of 23 hedge funds tracked by Insider Monkey were long Bunge Ltd (NYSE:BG) at the end of the third quarter, down from 33 funds a quarter earlier.

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