C&J Energy Services Inc (CJES): Point72 Asset Management Does a U-Turn

Steven Cohen’s Point72 Asset Management, has changed its course and is now reducing its exposure to C&J Energy Services Inc (NYSE:CJES). Point72 Asset Management’s latest filing with Securities and Exchange Commission show that the fund has reduced its stake to 2.55 million shares or 4.6% of all common stock of the company. We reported on September 16 the fund having increased its stake to around 3.61 million shares. The fund hold its stake in the company as an activist investor.


Steven Cohen established Point72 Asset Management after closing his earlier hedge fund, SAC Capital, late last year. Point72 Asset Management is a family office that only manages Mr. Cohen’s personal money. It manages assets in excess of $10 billion. Cohen’s earlier fund SAC Capital was closed after being convicted of insider trading and paying $1.2 billion in fines. At its peak SAC Capital managed assets in excess of $15 billion. Cohen founded SAC Capital in 1992, the fund was considered among the best hedge funds in the industry, returning an average of 25% annually excluding fess.  Other major holdings of the fund include Baker Hughes Incorporated (NYSE:BHI), up around 5% since last year, and Whiting Petroleum Corp (NYSE:WLL), which is down by more than 10% year over year.

Cohen’s earlier fund, SAC Capital, also held stakes in C&J Energy Services Inc (NYSE:CJES), in its last 13F filing (filed for first quarter of this year) the fund had reported owning around 250,000 shares.  During the third quarter, Point72 Asset Management increased its stake to 3.61 million shares from over 722,000 shares. After having a phenomenal run from January till late July, C&J Energy Services Inc (NYSE:CJES) tanked more than 35% in the last three months and is currently 8% year to date.

C&J Energy Services Inc (NYSE:CJES) is a $1.17 billion market cap company that specializes in providing hydraulic fracturing and other services to the oil drilling industry. For the second quarter of 2014, the company reported revenue of $367.9 million and EPS of $0.20, compared to revenue of $316 million and EPS of $0.21 for the same period, last year. On June 25, C&J Energy Services Inc (NYSE:CJES) announced its plan to merge with Nabors’ completion and production businesses. The company currently trades at 27.65 times its trailing earnings, compared to industry average of 16.44.

Jose Fernandez’s Stepstone Group and Chuck Royce’s Royce & Associates are two other major institutional investors that have C&J Energy Services Inc (NYSE:CJES) in their equity portfolios. As of June 30, 2014, Stepstone Group owns over 1.29 million shares and Royce & Associates owns over 380,000 shares. Most analysts on the Street are bullish on the company, with consensus rating being ‘Overweight’ and an average price target of $30.63.

A fund that till sometime was heavily bullish on a company, suddenly reducing its exposure by around 20% means investors must be a little skeptical about the stock, at least for the near-term.

Disclosure: None