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Steven Cohen's Top 5 Buys in 3rd Quarter

- By James Li

Steven Cohen (Trades, Portfolio), portfolio manager of Point72 Asset Management, disclosed this week his top five buys for the third quarter were Qualcomm Inc. (QCOM), Netflix Inc. (NFLX), Apple Inc. (AAPL), PVH Corp. (PVH) and A.O. Smith Corp. (AOS).


Cohen's firm seeks to achieve long-term capital appreciation using long, short, macro and systematic strategies. The portfolio's largest three sectors in terms of weight are consumer cyclical, health care and technology.

Qualcomm

Cohen invested in 4,969,126 shares of Qualcomm for an average price of $65.69 per share. The guru increased his portfolio 1.48% with this transaction.

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The San Diego-based semiconductor company develops and licenses wireless technology and also designs chips for mobile phones. Although CEO Steve Mollenkopf said on Nov. 7 the company reported "non-GAAP earnings per share above the high end of [management's] prior expectations," Qualcomm's profitability ranks just 6 out of 10 primarily due to net profit margins near a 10-year low of -21.40% and underperforming 87% of global competitors. Other severe warning signs include increasing long-term debt and a Sloan ratio that suggests poor earnings quality.

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Netflix and Apple

Cohen invested in 477,155 shares of Netflix for an average price of $363.45 per share and 650,299 shares of Apple for an average price of $208.30 per share. The two transactions increased the portfolio 1.35% in the aggregate.

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The Dow increased 200 points on Wednesday, led by gains in Caterpillar Inc. (CAT). CNBC columnist Fred Imbert added tech shares like Apple and other "FAANG" stocks like Facebook Inc. (FB) and Alphabet Inc. (GOOGL) were "down 20% from their 52-week highs through Tuesday's close," sending the broad market indexes approximately 3% over the three days leading up to Thanksgiving.

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Berkshire Hathaway Inc. (BRK-A)(BRK-B) CEO Warren Buffett (Trades, Portfolio) added 522,902 shares of Apple during the quarter, increasing the holding to 252,478,779 shares.

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PVH

Cohen invested in 766,460 shares of PVH, the holding company for brands like Calvin Klein and Tommy Hilfiger. Shares averaged $147.89 during the quarter.

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GuruFocus ranks the company's profitability 8 out of 10 on several positive indicators, which include a three-star business predictability rank, a strong Piotroski F-score of 8 and a Joel Greenblatt (Trades, Portfolio) return on capital that outperforms 85% of global competitors.

Other gurus that are riding PVH's strong growth potential include Ray Dalio (Trades, Portfolio)'s Bridgewater Associates and Lee Ainslie (Trades, Portfolio).

A.O. Smith

Cohen invested in 2,072,764 shares of A.O. Smith, a Milwaukee-based water technology company that manufactures water heaters and boilers for residential markets. Shares averaged $58.72 during the quarter.

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GuruFocus ranks the company's profitability 8 out of 10 on several positive indicators, which include expanding profit margins and returns on assets that outperform 87% of global diversified industrial companies.

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See also

Cohen's other top buys include major Buffett bank holding Wells Fargo & Co. (WFC), Nvidia Corp. (NVDA) and Novartis AG (NVS). The guru invested in 2,028,019 shares of Wells Fargo for an average price of $57.10 per share.

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Disclosure: No positions.

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Ray Dalio's Top 5 Buys in 3rd Quarter

This article first appeared on GuruFocus.