In this article we present the list of top 10 stocks billionaire Mets owner Steve Cohen just added to his portfolio.
Micron Technology, Inc. (NASDAQ:MU), The Coca-Cola Company (NYSE:KO), and Applied Materials, Inc. (NASDAQ:AMAT) is among the newest major additions to the 13F portfolio of billionaire money manager and New York Mets owner Steve Cohen.
Billionaire money manager Steve Cohen is the founder, president, chairman, and CEO of Point72 Asset Management, a New York-based hedge fund that manages $24.2 billion in assets as of the beginning of 2022. Cohen’s hedge fund reopened to outside investors in 2018 after serving a two-year supervisory bar handed down by the SEC after his former hedge fund, SAC Capital, pled guilty to insider trading charges.
The hedge fund titan, who has a personal fortune estimated at $17.4 billion by Forbes, has also become a titan among MLB owners, throwing money around with reckless abandon in an effort to guide his childhood team back to the top of the N.L East standings. The Mets have pushed their payroll beyond $260 million for 2022, topping the club’s previous record set last year, which was Cohen’s first as the owner of the team.
Cohen put himself in a position to buy the Mets and throw money at Max Scherzer by delivering exceptional returns for his clients over the years. Cohen ranked as the 14th best performing hedge fund manager of all time in terms of net gains since inception according to research conducted by LCH Investments. Cohen’s funds have generated net gains of $27.7 billion since 1992 according to LCH, including $1.7 billion in 2021.
Thanks to that 2021 performance, Point72’s 13F portfolio continued to increase in value throughout the year, rising for the 7th-consecutive quarter in Q4 to $25.04 billion. The fund was invested most heavily in tech and healthcare stocks at the end of 2021, with a balanced distribution across various other sectors beyond those two.
There was quite a bit of turnover in Cohen’s 13F portfolio during Q4, as there usually is, as the money manager unloaded 359 former holdings during the quarter while building up new stakes in 403 equities. We’ll take a look at the ten most prominent new stakes he purchased during Q4 in this article.
Our Methodology
We took a look at Point72 Asset Management’s 13F filing with the SEC for the December quarter to uncover the fund’s largest new positions and have ranked them according to their value. We follow hedge funds like Point72 Asset Management because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns. All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period.
Top 10 Stocks Billionaire Mets Owner Steve Cohen Just Added to His Portfolio
10. Mirati Therapeutics, Inc. (NASDAQ:MRTX)
Value of Point72 Asset Management‘s 13F Position: $70.39 million
Number of Hedge Fund Shareholders: 47
First up is biotech Mirati Therapeutics, Inc. (NASDAQ:MRTX), which Steve Cohen bought 479,845 shares of during Q4, building a stake valued at just over $70 million as of December 31. Hedge fund ownership of MRTX was unchanged during the fourth quarter, but is down by 20% since the end of Q1.
Mirati Therapeutics, Inc. (NASDAQ:MRTX) shares have been battered since the end of October, losing over 55% of their value.
Mirati Therapeutics, Inc. (NASDAQ:MRTX) has been hit with a pair of recent setbacks in regards to its non-small cell lung cancer treatment adagrasib, for those with the KRAS G12C mutation. In January, rival Amgen, Inc. (NASDAQ:AMGN) received European regulatory approval for its competing treatment Lumakras, giving it a headstart in that region.
Mirati was hit with further disheartening news in February when its NDA for adagrasib was approved by the FDA, but with a lengthy target action date of December 14, 2022, giving Amgen plenty of time to secure its lead in the U.S, where it’s also received approval for Lumakras.
Baron Opportunity Fund isn’t overly concerned about Amgen’s competing treatment however, having this to say about Mirati Therapeutics, Inc. (NASDAQ:MRTX) in its Q4 2021 investor letter:
“We established a position during the period in Mirati Therapeutics, Inc., a clinical-stage biotechnology company developing novel therapeutics targeting the genetic and immunologic drivers of cancer. The company’s lead drug, known as Adagrasib, targets a protein called KRAS that is a central node in driving tumor growth. We think Adagrasib has a best-in-class profile in a multi-billion dollar drug category. Currently, Amgen has a competing drug on the market, but clinical data on Adagrasib presented at the recent European Society of Medical Oncology meeting gives us confidence that Mirati’s drug has better attributes including residence time on target, efficacy response rates, longer duration of treatment, combinability opportunities, and blood-brain-barrier penetration.”
While Micron Technology, Inc. (NASDAQ:MU), The Coca-Cola Company (NYSE:KO), and Applied Materials, Inc. (NASDAQ:AMAT) may be some of the more stable additions to Cohen’s 13F portfolio during Q4, Mirati certainly has some intriguing long-term potential given its best-in-class treatment.
9. Phillips 66 (NYSE:PSX)
Value of Point72 Asset Management‘s 13F Position: $84.31 million
Number of Hedge Fund Shareholders: 42
Hedge funds are pouring back into Phillips 66 (NYSE:PSX), unsurprisingly, as soaring oil and energy prices bode well for the midstream energy company. Cohen bought a stake of over 1.16 million PSX shares during the quarter, becoming one of the many new shareholders of the refiner, which has seen a 62% surge in hedge fund ownership over the past two quarters.
Phillips 66 (NYSE:PSX) crushed adjusted earnings per share expectations by more than $1.00 during Q4, pulling in $2.94. The company’s chemicals division was a big performer last year, pulling in $1.9 billion in adjusted earnings, more than triple what it managed in 2020. Phillips also generated $1.8 billion in operating cash flow during the latest quarter and $6 billion for the year, which allowed it to pay down its long-term debt by $1.5 billion last year and raise its dividend. Phillips 66 (NYSE:PSX) has also expressed a desire to begin buying back some of its shares this year, while continuing to further pay down its debt.
8. Cisco Systems, Inc. (NASDAQ:CSCO)
Value of Point72 Asset Management‘s 13F Position: $86.38 million
Number of Hedge Fund Shareholders: 58
Cohen bought over 1.36 million shares of Cisco Systems, Inc. (NASDAQ:CSCO) during Q4, during which shares gained 16%. Cisco shares have slumped by 11% so far in 2021.
Cisco Systems, Inc. (NASDAQ:CSCO) grew revenue by 6% during its Q2 of fiscal year 2022, hitting $12.7 billion. Its internet for the future segment was its fastest growing, expanding revenue by 42% during Q2 to $1.32 billion. On the other hand, its hybrid work segment shrank by 9% during the quarter to $1.07 billion as the division’s market share continues to be eaten away by rivals like Five9 Inc (NASDAQ:FIVN).
The ClearBridge Large Cap Value Strategy likes what Cisco Systems, Inc. (NASDAQ:CSCO) has been doing on the R&D and growth fronts, saying this about the company in its Q3 2021 investor letter:
“We reinvested a portion of the proceeds into existing holding Cisco Systems, which also has highly valuable technology and an improving secular growth story with its leading position in core networking hardware, as well as in its growing software and services business. Cisco has refocused on winning share in the large and growing hyperscale market and has been investing aggressively in R&D to support growth. We believe Cisco has found new legs after previously ceding some growth opportunities in cloud while maintaining its strong presence in the carrier and enterprise markets. Cisco boasts a strong balance sheet and accelerating multiyear growth while trading at a modest multiple of earnings.”
7. Walgreens Boots Alliance Inc. (NASDAQ:WBA)
Value of Point72 Asset Management‘s 13F Position: $87.17 million
Number of Hedge Fund Shareholders: 43
There was a 13% uptick in the number of hedge fund shareholders of Walgreens Boots Alliance Inc (NASDAQ:WBA) during Q4, thanks in part to the new stake of 1.67 million shares purchased by Cohen’s hedge fund. Nonetheless, hedge fund ownership of WBA is about half of what it was six years ago.
Walgreens Boots Alliance Inc (NASDAQ:WBA) isn’t a company that’s going to wow anyone with its growth projections, though the pharmacy retailer is looking into several new initiatives that could somewhat accelerate its sales, such as offering primary care services in locations adjacent to its existing pharmacies.
What Walgreens does provide is a stout dividend that yields 4.25% as of March 31 and which is extremely safe, with the company fast approaching dividend king status thanks to its 46-year run of hiking its dividend payments every year.
That dividend and the company’s low valuation certainly attracted Miller Howard Investments to the stock. Here is what it had to say about Walgreens Boots Alliance Inc (NASDAQ:WBA) in its Q3 2021 investor letter:
“While optimistic about a recovery, we continue to balance our cyclical holdings with dividend-payers in stable, less economically-sensitive industries. We took a position in Walgreens (WBA) based on its low valuation, high dividend yield, and stable business model.”
6. Cigna Corporation (NYSE:CI)
Value of Point72 Asset Management‘s 13F Position: $96.38 million
Number of Hedge Fund Shareholders: 53
Closing out the first half of the list Cigna Corporation (NYSE:CI), hedge fund ownership of which has dipped by 16% over the past two quarters. Cigna shares are virtually flat over the last year.
Cigna Corporation (NYSE:CI) is another pharmacy and healthcare stock that Cohen bought during Q4 which won’t wow anyone with its growth, but which provides stable returns for shareholders. The company returned $9 billion to shareholders last year. Cigna plans to drive future growth by capitalizing on what it believes to be three major trends in the healthcare space: the growing understanding of the link between mental and physical health, the growing proliferation of biosimilars, and the growing usage of alternative sites of care.
Davis Opportunity Fund likes Cigna and other healthcare names in a world with several rapidly aging populations. Here is what the fund had to say about Cigna Corporation (NYSE:CI) in its Q4 2021 investor letter:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
In the second half of this article we’ll take a look at Cohen’s Q4 purchases of Micron Technology, Inc. (NASDAQ:MU), The Coca-Cola Company (NYSE:KO), and Applied Materials, Inc. (NASDAQ:AMAT), among other stocks.
5. Lam Research Corporation (NASDAQ:LRCX)
Value of Point72 Asset Management‘s 13F Position: $109 million
Number of Hedge Fund Shareholders: 63
Steve Cohen’s Point72 Asset Management bought a net total of 151,100 shares of Lam Research Corporation (NASDAQ:LRCX) during Q4, ending the period with a position valued at nearly $109 million. Varenne Capital Partners also took a bullish stake in LCRX during the quarter, with 15.32% of its 13F assets invested in the semiconductor equipment manufacturer.
Lam Research Corporation (NASDAQ:LRCX) shares have skyrocketed by more than 300% since the end of 2018, when the latest semiconductor downturn came to an end. Surprisingly, shares are down by 24% this year even in the midst of notable semiconductor shortages. The company has been dinged partly due to supply chain issues that are largely out of its control, which caused it to miss the midpoint of its guidance ranges with its fiscal Q2 2022 results. Even then, revenue grew by 22% year-over-year and adjusted earnings jumped by 41%.
Here is what Vulcan Value Partners Large Cap Fund had to say about Lam Research Corporation (NASDAQ:LRCX) in its Q4 2021 investor letter:
“Lam Research Corp. was a material contributor during the quarter. The company designs and manufactures equipment used in the fabrication of semiconductors. Consolidation and key shifts within the industry have improved the company’s competitive position in the industry and are driving demand for more complex capital equipment. The company’s near-term outlook improved during the quarter as customers announced plans to increase capital spending.”
4. Applied Materials, Inc. (NASDAQ:AMAT)
Value of Point72 Asset Management‘s 13F Position: $116 million
Number of Hedge Fund Shareholders: 79
Cohen is clearly big on semiconductor equipment manufacturers right now, as he also took a large stake in Applied Materials, Inc. (NASDAQ:AMAT) during Q4, buying 739,097 shares. There was a 16% jump in hedge fund ownership of AMAT during the quarter.
Applied Materials, Inc. (NASDAQ:AMAT) achieved very similar growth results as Lam Research during its latest quarter, which represented Q1 of the company’s fiscal year 2022. Applied Materials grew revenue by 21% year-over-year to $6.27 billion, while adjusted earnings jumped by 36% to $1.89 per share. Unlike Lam Research, Applied Materials actually beat estimates and delivered results closer to the higher end of its guidance range, yet it too suffered an investor pullback following the quarterly results. AMAT shares are down by 16% so far in 2022.
Here is what Davis Opportunity Fund had to say about Applied Materials, Inc. (NASDAQ:AMAT) and tech stocks in general in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
3. Atlassian Corporation Plc (NASDAQ:TEAM)
Value of Point72 Asset Management‘s 13F Position: $124 million
Number of Hedge Fund Shareholders: 70
Point72 bought up 325,579 shares of Atlassian Corporation Plc (NASDAQ:TEAM) during Q4, one of a net total of nine money managers that added TEAM to their 13F portfolios during the quarter. Catherine D. Wood’s ARK Investment Management and Steven Boyd’s Armistice Capital also took new stakes in the project management software maker.
Atlassian Corporation Plc (NASDAQ:TEAM) grew its revenue by 37% during its Q2 of fiscal 2022, while its cloud services performed even better, growing sales by 58%. Atlassian is also in the process of redomiciling its parent company to the U.S which it expects to derive several benefits from, including more favorable tax rates, improved access to capital, and inclusion is more indices. The move is expected to be completed during the first half of the company’s fiscal 2023.
While Cohen was buying, Tao Value was trimming its stake in Atlassian Corporation Plc (NASDAQ:TEAM) due to what it perceived to be a high valuation. Here is what the fund had to say about its ownership of the company in its Q4 2021 investor letter:
“We have no new position this quarter and have made below changes to our portfolio. We trimmed Atlassian (TEAM) for the first time since our initial purchase, for its high valuation as well as to control its relative size.”
2. The Coca-Cola Company (NYSE:KO)
Value of Point72 Asset Management‘s 13F Position: $167 million
Number of Hedge Fund Shareholders: 72
Hedge fund ownership of The Coca-Cola Company (NYSE:KO) jumped by 13% during Q4, hitting a 9-year high. Cohen was one of the prominent money managers to take a stake in the beverage giant, buying more than 2.82 million shares.
The Coca-Cola Company (NYSE:KO) shares have been on an upward trend since the low point of the pandemic in March 2020, gaining over 60% in the two years since. That’s not entirely surprising given that Coca-Cola has already surpassed its pre-pandemic revenue and income levels. The company’s revenue came in at $38.7 billion last year, a 3.7% increase compared to 2019.
The Coca-Cola Company (NYSE:KO) also recently joined the short list of dividend kings that can boast not just 50, but 60 straight years of annual dividend increases. Coca-Cola’s quarterly dividend of $0.44 equates to a solid annual yield of 2.84% on its shares. Cola-Cola’s dividend should be very safe for the foreseeable future, with a payout ratio of just over 70% in 2021 and the company’s net debt-to-EBITDA ratio expected to fall below 2x by 2024.
1. Micron Technology, Inc. (NASDAQ:MU)
Value of Point72 Asset Management‘s 13F Position: $206 million
Number of Hedge Fund Shareholders: 83
Topping the list of Steve Cohen’s newest buys is Micron Technology, Inc. (NASDAQ:MU), another big player in the semiconductor space. Cohen was one of several money managers to add MU to their portfolios in Q4, as there was a 28% increase in hedge fund ownership of the stock. Micron nonetheless remains less popular among hedge funds than it has at various points over the past decade, most notable around 2014-2015.
Micron Technology, Inc. (NASDAQ:MU) shares are down by over 16% in 2022, paring back some of the hefty 46% gains they enjoyed from mid-October to mid-January. Regardless, they’re still down by nearly 16% over the last year, struggling to woo investors even amid a global chip shortage.
Hazelton Capital Partners found that curious earlier this year before Micron’s big Q4, having this to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different.
However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
For a look at several compelling cheap stocks that could make a good addition to any portfolio, check out 10 Cheap Dividend Stocks to Buy Today and These 10 Penny Stocks are Trending on Reddit.
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Disclosure: None. Top 10 Stocks Billionaire Mets Owner Steve Cohen Just Added to His Portfolio is originally published at Insider Monkey.
