By looking at the historical 13F filings of Steven Cohen’s SAC Capital, we calculate that his large-cap stock picks (those with market caps between above $20 billion) returned, on average, 0.32% per month between 1999 and 2012. This is in-line with the 0.32% monthly total return for the S&P 500 during the same time period. If we adjust for risk by utilizing Carhart’s four factor model, his large cap stocks generated a modest 10 basis points of positive alpha. More recently, between 2008 and 2012, Cohen’s large-cap stock picks did worse, generating monthly alpha of negative 15 basis points. In general, our research indicates that most investors, including hedge funds, cannot generate enough outperformance to justify their high fees when it comes to larger cap stocks. Our research also shows that hedge fund managers are generally good pickers of small cap stocks. We believe investors can generate better returns if they avoid Cohen’s large and mid-cap picks and focus on his smaller-cap stocks.
Amazon.com Inc. (NASDAQ:AMZN) is Cohen’s top large cap position, with his 503,705 shares worth about $201 million. During the fourth quarter of 2013, he more than tripled his holding of the online retailer, which accounts for roughly 1% of his total equity portfolio. Other hedge fund managers holding the stock include Paul Ruddock and Steve Heinz of Lansdowne Partners, Ken Fisher of Fisher Asset Management and Philippe Laffont of Coatue Management.
Second on his list is Google Inc. (NASDAQ:GOOG), with Cohen’s 168,550 shares valued at approximately $189 million. He increased his stake by 76% during the fourth quarter, with the Internet powerhouse accounting for 1% of his equity holdings. Cohen joins Paul Ruddock and Steve Heinz of Lansdowne Partners, Boykin Curry of Eagle Capital Management, Ken Griffin of Citadel Investment Group and other hedge fund managers with bullish views on the company.
Halliburton Company (NYSE:HAL) is third on his list of large cap stocks, with his 3.2 million share stake accounting for $164 million. SAC Capital increased its position by almost a factor of 30 during the fourth quarter, with the oil services company comprising 1% of its total equities. Glenn Greenberg’s Brave Warrior Capital, George Soros’ Soros Fund Management and Harris Associates are some of the other hedge funds we track that hold large positions in the stock.
Fourth on Cohen’s list of large cap stocks is CBS Corp. (NYSE:CBS), with his 2.6 million shares worth about $163 million. He increased his stake in the $36.5 billion market cap mass media company by more than seven times during the fourth quarter. Other bullish hedge fund investors of the stock include Philippe Laffont of Coatue Management, Sean Cullinan of Point State Capital and Eric Mandelblatt of Soroban Capital Partners.
Rounding out his top five large cap holdings is Micron Technology (NASDAQ:MU), with Cohen’s 7.3 million shares valued at approximately $159 million. Micron is a $23.9 billion market cap company that manufactures and markets semiconductor solutions globally. Seth Klarman of Baupost Group, David Einhorn of Greenlight Capital and Andreas Halvorsen of Viking Global are some of the other hedge fund managers that hold the stock.
Second Wave of Moves from SAC Capital
Recent Changes in SAC Capital Advisors’ Equity Portfolio
Billionaire Steven Cohen Initiates Position in Midstates Petroleum Company Inc (MPO); Boosts Stake in Zynga Inc (ZNGA)