Billionaire Steve Cohen’s High Conviction Ideas

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).

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.

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.

Signet Jewelers Ltd. (NYSE:SIG)

– Shares Owned by Point72 (as of December 31): 1.33 Million

– Value of Holding (as of December 31): $165.01 Million

Signet Jewelers Ltd. (NYSE:SIG) was also a recipient of Mr. Cohen’s bullishness, as his firm more than quadrupled its position in the company over the quarter, taking its holding to 1.33 million shares, probably seeking to make the most of the 9.1% tumble the stock suffered during the fourth quarter. On Tuesday, Signet Jewelers Ltd. (NYSE:SIG) announced that it has decided to delist itself from the London Stock Exchange, arguing that less than 1% of the annual trading volume it witnessed each year went through said exchange. Another Signet bull is Keith Meister’s Corvex Capital, the largest investor of the stock among those that we track. The fund upped its stake by 11% over the fourth quarter, disclosing ownership of 5.62 million shares as of the end of December.

Advance Auto Parts, Inc. (NYSE:AAP)

– Shares Owned by Point72 (as of December 31): 1.45 Million

– Value of Holding (as of December 31): $218.94 Million

Point72 initiated a new stake in Advance Auto Parts, Inc. (NYSE:AAP) during the fourth quarter, as did Barry Rosenstein’s JANA Partners, which bought 562,343 shares of its own, worth more than $84.63 million. Both talented activist investors were likely aiming to take advantage of the 20.5% decline that the stock price experienced between the beginning of October and the end of December. Advance Auto Parts reported its fourth quarter results last week with its earnings of $1.22 per share coming in $0.01 above the consensus estimates, though sales of $2.03 billion missed expectations of $2.07 billion. Advance Auto Parts, Inc. (NYSE:AAP)’s management explained that the 35% year-over-year tumble in profits was mainly driven by weaker year-over-year sales and less selling days in the quarter.

Alphabet Inc (NASDAQ:GOOGL)

– Shares Owned by Point72 (as of December 31): 378,100 Class A Shares

– Value of Holding (as of December 31): $294.16 Million

After a 12% increase to the family office’s stake in Alphabet Inc (NASDAQ:GOOGL), the holding company of Google became Point72’s most valuable position, jumping two spots from the end of the third quarter of 2015. Shares of Alphabet Inc (NASDAQ:GOOGL) gained more than 21% over the fourth quarter, also helping push teh value of the holding. Alphabet recently announced that Google Ideas, its internal think tank and policy unit, will now be named Jigsaw, and will work as one of the company’s ten units. Jared Cohen will serve as the president of the segment. Also bullish on the stock is Ken Fisher’s Fisher Asset Management, which boosted its position by 3% over the fourth quarter, taking its holding to 949,014 class A shares of the company, worth more than $738 million.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.