Hedge fund managers are known to risk some of their own cash
alongside investor's money to show they have "skin in the
But big-name investors running what are known as family
offices, or firms that manage investments for a particular
family, take that idea to a whole new level.
Billionaire Steve Cohen is a newly-added member to the family
office crowd, joining the likes of fellow billionaires George
Soros and Carl Icahn.
Best known for his long-tenured hedge fund SAC Capital
Advisors, Cohen has been running rings around the market for
decades. SAC Capital has averaged 30% annual returns for 18
years, according to
Cohen's new gig, Point72, groups and invests more than $9
billion of his own assets together with assets from a handful of
former SAC employees. And in the first half of 2014, the fund has
already profited nearly $1 billion, according to
The New York Times
Although Point72 is a private firm, it is subject to certain
SEC guidelines. One of the most insightful rules requires Cohen
to report when the Point72 owns more than 5% of a publicly traded
Take a look at some of Cohen's largest August investments.
Insmed, Inc. ( NASD: INSM)
This stock stands out as a high-conviction pick. Why? Cohen
has had to submit two SEC filings in the past few weeks for his
continued buying. His stake amounted to 5.21% at the end of July,
but a more recent filing on August 11 showed that he's bumped his
ownership up to 5.4%.
Over the trailing month, this biopharma stock has tumbled by
more than 31%. The stock slid dramatically after announcing that
its flagship drug, Arikayce, will require two additional
unexpected Phase 3 studies to gain approval from the FDA.
Point72's second purchase on August 11th was most likely an
averaging down tactic to lessen the blow of the falling stock
C&J Energy Services, Inc. (
On August 6th, Point72 disclosed a 5.4% stake in CJES, a major
player in the controversial hydraulic fracturing space. The
company made waves at the end of June by agreeing to merge with
Nabors Industries (
) in a deal valued at nearly $3 billion.
The stock recently fell by 10% following its latest earnings
announcement. However, CJES expects the merger to positively
impact earnings during its first year of operations.
Kraton Performance Polymers (
KRA can now count Cohen as a significant shareholder after
purchasing a 5.1% stake in the company.
The producer of engineer polymers hasn't found the same type
of support from sell-side analysts, however. It has received two
downgrades so far this summer from UBS and Credit Suisse. That
said, a consensus of analyst price targets comes in at $24.71 -
that's over 22% of upside from where the stock stands
Kindred Healthcare (
Kindred is Cohen's only new purchase that carries a dividend
yield, coming in at 2.1%. The operator of hospitals and nursing
centers has taken a hefty spill in August after issuing lower
Considering Cohen reported the purchase of KND shares on
August 13, it appears that the manager thinks a rebound is ahead.
Point72 increased its stake in the company to 5.1% following a
20% drop in stock price.
Risks to consider:
Cohen's methodologies have come under fire in the past,
resulting in SAC Capital Advisor's entering a guilty plea to
insider trading and paying a $1.8 billion settlement. Although
Cohen was never charged with any wrongdoing and aims to distance
himself from the conviction, it is important to be cognizant of
Action to take -->
While the closing of SAC Capital Advisors was the end of an era,
a new one took its place. With more than two decades experience
generating massive returns, Steve Cohen is still a force to be
reckoned with among fund managers. Glimpsing into his personal
portfolio through SEC filings seems to be the clearest look we'll
have into his office's inner workings.
Gurus like Cohen tend to have a following because
investors hope to piggyback on their investments... and for some
that may be successful
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