Steve Cohen‘s Point72 Asset Management began managing outside capital in 2018 after operating for several years as a family office following Cohen’s former hedge fund SAC Capital Advisors being involved in one of the 10 Biggest Insider Trading Scandals Ever to Rock Companies. That’s great news for investors, who have reportedly poured $5 billion of their assets into the fund since it opened to the public, as Cohen’s returns have been some of the best in the industry. His success has propelled him to a personal fortune of $12.8 billion according to Forbes, making him one of the top 100 richest people in the world.
November was a rough month for the fund however, as it lost 5%, and a bear market may be upon us sooner than later according to the billionaire investor. During an event at the 92nd Street Y in mid-November, Cohen predicted a bear market by 2020, and expected that returns won’t be very good over the next two years. Several industries have already fallen into bear markets, with the most recent being finance, now down by 20% from its 52-week highs, while several others are in correction territory (down by over 10% from their 52-week highs).
Despite the influx of $5 billion in capital, Point72’s 13F portfolio has only risen by just over $1 billion in value in 2018 according to its latest 13F filing, declining by 3% quarter-over-quarter to $24.25 billion as of the end of Q3. Cohen’s fund was particularly bullish on tech stocks in Q3, which rose by nearly 4 percentage points to 16.46% weighting in the fund’s portfolio. Healthcare remained the sector which was given the most weighting (18.49%) by Point72, while the fund lowered its exposure to consumer discretionary (11.09%) and communications (7.31%) stocks during the quarter.
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On the next page we’ll check out four stocks that Cohen was confident about heading into Q4 despite his broader market misgivings, as well as one stock he dumped.
Stocks Bought in Q3
QUALCOMM Incorporated (NASDAQ:QCOM)
– Shares Bought During Q3: 4.97 million
– Value of Holding (as of September 30): $358 million
– Q4 Return (through December 14): -20.01%
– Forward P/E Ratio: 12.72
– Forward Dividend Yield: 4.30%
Point72 took a large new position in QUALCOMM Incorporated (NASDAQ:QCOM) during Q3 that instantly made it the second-most valuable long position owned by the fund. Cohen’s new holding contributed to Qualcomm being one of 20 Dividend Stocks That Billionaires Are Piling On, with it ranking sixth on that list.
Netflix, Inc. (NASDAQ:NFLX)
– Shares Bought During Q3: 477,155
– Value of Holding (as of September 30): $179 million
– Q4 Return (through December 14): -28.68%
– Forward P/E Ratio: 64.14
Point72 opened a large position in Netflix, Inc. (NASDAQ:NFLX) during Q3, ahead of the streaming giant’s planned movie blitz, which will see it release as many as 90 films a year with individual budgets that could reach as high as $200 million. Netflix added 7 million subscribers in Q3, but is on pace for negative free cash flow of $3 billion this year because of its aggressive spending on content, which included renewing all 10 seasons of Friends for 2019 at a controversial price tag of $100 million.
PVH Corp (NYSE:PVH)
– Shares Bought During Q3: 766,460
– Value of Holding (as of September 30): $110.68 million
– Q4 Return (through December 14): -35.45%
– Forward P/E Ratio: 8.89
– Forward Dividend Yield: 0.16%
Cohen unloaded The Gap, Inc. (NYSE:GPS) during Q3, replacing it in Point72’s portfolio with PVH Corp (NYSE:PVH), owner of clothing brands like Tommy Hilfiger. Unfortunately for the fund, PVH shares have been battered in Q4 following third-quarter weakness in its Calvin Klein brand, which lead to a rare revenue miss by the company, its first in two years.
Cigna Corporation (NYSE:CI)
– Shares Bought During Q3: 812,292
– Value of Holding (as of September 30): $193 million
– Q4 Return (through December 14): -1.38%
– Forward P/E Ratio: 13.28
– Forward Dividend Yield: 0.02%
After a huge drop in the hedge fund ownership of Cigna Corporation (NYSE:CI) during Q2, that mark rebounded by 22% in Q3. While Point72 was already a shareholder, the fund was also extremely bullish on the stock during the quarter, multiplying its share count by 706%.
Stocks Sold in Q3
The Gap, Inc. (NYSE:GPS)
– Shares Sold During Q3: 2.74 million
– Value of Holding (as of September 30): $0
– Q4 Return (through December 14): -7.76%
– Forward P/E Ratio: 10.04
– Forward Dividend Yield: 3.65%
Unlike fellow billionaire investor Ray Dalio, who bought The Gap, Inc. (NYSE:GPS) during Q3, Cohen unloaded his fund’s $88.9 million stake in the struggling retailer, whose namesake brand has been dragging down results of late. Point72 had owned the second-largest position in the stock on June 30 among the funds tracked in our database.
Disclosure: None
