Billionaire Steve Cohen Aggressively Bought These 5 Stocks In Q3

Steve Cohen built a strong reputation and personal fortune for himself while managing hedge fund S.A.C Capital Advisors from 1992 until early 2014, when the fund was converted into the family office Point72 Asset Management. Even though Cohen no longer manages outside money, given his strong track record, his stock picks are still carefully monitored. While many other investors were exhibiting caution during the brutal third quarter, Cohen was aggressive, opening 300 new positions and adding a net 41 stocks to his firm’s equity portfolio. In this article we’ll look at five of the stocks that Cohen was buying the most during the third quarter and judge the factors that may have prompted his purchases.

We’ll start with Lululemon Athletica inc. (NASDAQ:LULU), the Canadian yoga apparel company which was enjoying a solid year until early September, when its second quarter results heavily disappointed investors. Shares plunged by 16% on September 10 despite an earnings beat, and drifted down by another 5% over the rest of September, which may have given Cohen a purchase price he liked, as he bought 2.85 million shares during the quarter, adding them to a holding that had previously contained just 35,000 shares. The purchase elevated Lululemon Athletica inc. (NASDAQ:LULU) to the fourth-most valuable long position in Cohen’s equity portfolio, worth over $146 million. Cohen isn’t alone in his feelings about the stock; both Citigroup Inc (NYSE:C) and MKM Partners recently ranked Lululemon as a top retail stock to buy. It ranked as Citi’s top retail pick, while MKM Partners put a $69 price target on the stock, which suggests 50% upside potential. 12.60% of Lululemon Athletica inc. (NASDAQ:LULU)’s shares were held by the investors in our database at the end of the third quarter.

Eli Lilly and Co (NYSE:LLY) was the largest new long position added to Cohen’s portfolio in the third quarter, comprising 1.47 million shares worth $123 million. Shares are up by 25% this year, but are down slightly in the fourth quarter, having fallen by over 7% on October 12 after it announced the discontinuation of evacetrapib, a cardiovascular treatment in late-stage trials in the U.S, Europe, and Japan. Eli Lilly and Co (NYSE:LLY) gave up on the treatment at the recommendation of an independent committee, due to its low probability of success. After falling even further later in the month, shares have since made up most of the losses. Eli Lilly was recently upgraded to ‘Outperform’ from ‘Market Perform’ by BMO Capital Markets, in addition to having its price target bumped up to $100 from $90, which represents upside of 20%. Billionaire Ken Griffin owns 4.14 million shares of Eli Lilly and Co (NYSE:LLY), having bought 2.87 million shares during the third quarter.

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Three more stocks Cohen couldn’t get enough of in the third quarter are revealed on page two.

Next up is InterOil Corporation (USA) (NYSE:IOC), which Cohen bought 2.44 million shares of during the September quarter. Point72 now holds 3.02 million shares of the gas and oil exploration company, which holds permits covering four million acres of land in Papua New Guinea. Yesterday, InterOil Corporation (USA) (NYSE:IOC) reported positive results from its drilling at the Antelope-4 sidetrack-1 well in Petroleum Retention License 15 (PRL 15), which sent shares up by 7%. Investors that we track showed a lot of faith in InterOil Corporation (USA) (NYSE:IOC) during the third quarter. While shares plunged by 44%, the value of their collective holdings actually increased by 27% to $273 million, so they were heavily banking on a turnaround. So far, so good, as shares are up by 15% in the fourth quarter.

Iconic coffee house Starbucks Corporation (NASDAQ:SBUX) lands on the list after Cohen purchased 1.59 million shares of its stock during the previous quarter, a greater than 900% boost to his holding that is now worth just over $100 million. Shares of Starbucks Corporation (NASDAQ:SBUX) have trended up all year, prompting the company to undertake a 2:1 stock split in April as shares approached $100. Their lone blip came in late-August when they dipped by 13% over a four-trading-day span, which may have been when Cohen pounced. They quickly rebounded and have gained another 9% in the fourth quarter. Starbucks Corporation (NASDAQ:SBUX) continues to branch out from its traditional morning beverage fare with an expanded “evenings” menu that includes craft beer and wines, and small dinner plates. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, was also bullish on Starbucks in the third quarter, adding 3.82 million shares to its holding, now its fourth-largest.

Lastly, Cohen also liked Microsoft Corporation (NASDAQ:MSFT) in the third quarter, buying 2.11 million shares of the software giant during the quarter, when he previously owned just 4,200 (if you’re doing the math at home, that’s a 50,235% increase). Microsoft Corporation (NASDAQ:MSFT) was also gaining in popularity among the entirety of the investors that we follow, ranking as their sixth-most popular stock with 113 investors long Microsoft, up by six quarter-over-quarter. Shares of Microsoft and Hewlett Packard Enterprise Co (NYSE:HPE) are both up by over 1% today after the companies announced a collaboration to strengthen their position in cloud computing, based around Windows 10, taking advantage of the operating system’s “Windows-as-a-Service” to allow software management for HP Enterprise’s corporate customers. Cohen is also a shareholder of HP Inc (NYSE:HPQ), which spun-off Hewlett Packard Enterprise in October.

Disclosure: None