Steve Cohen’s family office Point72 Asset Management achieved net returns of 7.50% during the first quarter of 2015 according to data compiled by CNBC, which may be based on early estimates by the reporting firms and not 100% definitive. That would be a marked improvement over the 4.4% returns, we calculated for it based on the weighted average returns of its 527 long positions at the end of 2014 which had a market cap of at least $1 billion. There are a number of factors that could contribute to the improved performance reported by Cohen, including large turnover to his reported long positions (which Cohen has demonstrated a proclivity for in the past), as well as the performance of any positions which are not disclosed, including short positions or investments in private companies.
We previously warned you to stay away from Cohen’s large-cap picks, which we calculated as having returned just 0.32% monthly between 1999 and 2012, which failed to outperform the S&P 500 during that same timeframe. Instead, we have been encouraging investors to look into our small-cap strategy, which collates the best performing picks of hedge funds, which is not the large-caps which dominate many of their portfolios, but rather their small-caps. Their collective top 15 small-cap picks outperformed the S&P 500 Total Return Index by 95 basis points per month in backtests over the period of 1999 to 2012, and has continued to crush the market since it was launched in August 2012, by an average of nearly 20 percentage points per year (read the details).
Perhaps exemplifying this point, Cohen’s top performing long position in the first quarter was in a small-cap company, Kindred Healthcare, Inc. (NYSE:KND), a $2.03 billion market-cap operator of assisted-living facilities, nursing centers, and rehabilitation hospitals. Cohen had a 4.67 million share position in Kindred Healthcare, Inc. (NYSE:KND) valued at $84.90 million, which was increased by 256% during the fourth quarter. However it still only ranked as Cohen’s 22nd-largest long position, primarily behind large-cap companies (only three of the 21 long positions ahead of it were in companies with market caps of $5 billion or less). Kindred Healthcare, Inc. (NYSE:KND) soared by more than 31% during the first quarter which was good news nonetheless for Cohen, but even better news for Conan Laughlin’s North Tide Capital, whose equity portfolio had 6.1% exposure to the stock compared to Cohen’s mere 0.59%.
One of Cohen’s large-cap picks that did perform very well was Amazon.com, Inc. (NASDAQ:AMZN), though his position of 260,000 shares in the online retail giant only landed it in the 28th position in terms of value at $80.69 million. After a very poor 2014 in which shares dipped by 22%, Amazon.com, Inc. (NASDAQ:AMZN) busted out with a big first quarter of 2015, making up for most of those previous year’s losses with a 19.90% gain. Amazon’s big earnings report during the quarter clearly caught many investors off guard, as the company was one of five with the most put options activity on it among the funds in our database. One fund that was very bullish on Amazon.com, Inc. (NASDAQ:AMZN) entering 2015 was Boykin Curry’s Eagle Capital Management, which opened a large new position of 1.72 million shares during the fourth quarter.