High turnover. Of course, for these stocks to rise to the top of SAC’s portfolio some other stocks had to fall. Our analysis shows that the fund cut its stake in Sirius XM almost in half, and sold nearly 3 million shares of AIG as well. It also sold nearly all of its shares of Gilead Sciences, Inc. (NASDAQ:GILD) and Tiffany & Co. (NYSE:TIF), which had been among its five largest holdings by market value at the end of September. The jeweler has been struggling recently, and with a trailing earnings multiple of 20 we can see why Cohen may have considered it a poor value. Gilead, a biopharmaceutical company with a market capitalization of $63 billion, has been another high flier over the last year- up 77%. While it has been reporting double-digit growth rates on both top and bottom lines, the trailing P/E is 25 here and so again SAC may have decided that the valuation is overestimating future growth rates.
While Gilead and Tiffany are not particularly attractive value stocks, we certainly don’t think that Facebook is either; the market seems to be assuming quite high earnings growth for a company which still seems to be casting for a monetization strategy. Sherwin-Williams and eBay aren’t cheap either, and while they have been experiencing good sales growth rates (and may be worth investigating further) we wouldn’t be particularly excited about them from a value perspective either.
Disclosure: I own no shares of any stocks mentioned in this article.