In a newly-amended filing with U.S. Securities and Exchange Commission, Steve Cohen’s Point72 Asset Management disclosed increasing its position in Olin Corporation (NYSE:OLN), as it is about to complete its merger with Dow Chemical Co (NYSE:DOW). The investor raised his position in Olin Corporation (NYSE:OLN) to over 4.94 million shares from 4.06 million shares held previously, according to the filing. Point72’s current stake is equal to 6.4% of Olin Corporation (NYSE:OLN)’s outstanding common stock.
Based in Connecticut, Point72 Asset Management is the legal successor of the hedge fund SAC Capital Advisors. It was launched in April 2014 with approximately $9 billion in initial capital, which represented Mr. Cohen’s personal wealth. SAC Capital was shut down in 2013 and paid a substantial fine to settle insider-trading charges. Point72 Asset Management, is prohibited from managing money for outside investors as part of the settlement with the Department of Justice. Point72 employs a long/short equity investing approach and makes significant quantitative and macro investments. According to the fund’s latest 13F filing with the SEC, Point72 manages an equity portfolio worth $14.67 billion as of March 31.
Tracking hedge funds and prominent investors like Steve Cohen is a wise decision because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 50 most popular large-cap stocks among hedge funds had a monthly alpha of about 6 basis points per month between 1999 and 2012; however the 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points during the same period. This means investors would have generated 10 percentage points of alpha per year simply by imitating hedge funds’ top 15 small-cap ideas. We have been tracking the performance of these stocks since the end of August 2012 and these stocks beat the market by 84 percentage points (135% return vs. S&P 500’s 55% gain) over the last 34 months (see the details here).
Point72 stated in the filing that it acquired shares of Olin Corporation (NYSE:OLN) for investment purposes and it has no intentions to influence the control or management of the company.
Olin Corporation (NYSE:OLN) is a manufacturing company, with a market cap of $1.96-billion. It operates three business segments: Chlor Alkali Products, Chemical Distribution and Winchester. Last week, Olin Corporation (NYSE:OLN) reported that it received all the foreign regulatory approvals required to close its pending merger with Dow Chemical Co (NYSE:DOW). Under the agreement, Olin Corporation (NYSE:OLN) has agreed to buy certain chlor alkali and downstream derivatives businesses from Dow using a Reverse Morris Trust structure. As part of the deal, Dow will first transfer its U.S. chlor alkali and vinyl, global chlorinated organics, and global epoxy businesses to a subsidiary. Next, the company will distribute the stock of that subsidiary to its shareholders through a split-off or spin-off or a combination. Then, the subsidiary will immediately merge with Olin.
What will Dow’s shareholders get from this deal? You can read it on the next page.