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Top 1st-Quarter Trades of Steven Cohen's Firm

·5 min read

- By Margaret Moran

Steven Cohen (Trades, Portfolio)'s Point72 Asset Management recently disclosed its portfolio updates for the first quarter of 2021, which ended on March 31.


Point72 is a hedge fund that was formed in 2014 when SAC Capital Advisors converted its investment operations into a family office. In 2018, the firm reopened to external investors. Point72 invests via a wide range of asset classes and strategies worldwide. Its core investing strategy is based on bottom-up research with a focus on fundamentals and macroeconomic conditions. Cohen serves as the president, CEO and chairman of the firm.

The firm's top buys for the quarter were Western Digital Corp. (NASDAQ:WDC) and Baidu Inc. (NASDAQ:BIDU), while its biggest sells were Alphabet Inc. (NASDAQ:GOOGL) and Advanced Micro Devices Inc. (NASDAQ:AMD).

Western Digital

The firm increased its investment in Western Digital (NASDAQ:WDC) by 5,141,587 shares, or 1,932.11%, for a total holding of 5,407,700 shares. The trade had a 1.61% impact on the equity portfolio. During the quarter, shares traded for an average price of $61.92.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Based in San Jose, California, Western Digital is a computer technology company that designs, manufactures and sells various data technology products, such as storage devices, data center systems and cloud storage services.

On May 21, shares of Western Digital traded around $72.61 for a market cap of $22.25 billion and a price-earnings ratio of 64.83. According to the GuruFocus Value chart, the stock is significantly overvalued.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

The company has a financial strength rating of 5 out of 10 and a profitability rating of 7 out of 10. The interest coverage ratio of 2.31 is lower than 89% of industry peers, but the Piotroski F-Score of 8 out of 9 indicates financial stability. The return on invested capital is typically above the weighted average cost of capital, though the gap has narrowed over the years.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Baidu

The firm also upped its stake in Baidu (NASDAQ:BIDU) by 1,374,150 shares, or 602.04%, for a total holding of 1,602,400 shares. The trad had a 1.40% impact on the equity portfolio. Shares traded for an average price of $261.90 during the quarter.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Baidu is a Chinese internet and technology giant that specializes in artificial intelligence, internet services, search engines and related products. It has access to the world's largest domestic addressable population of internet users.

On May 21, shares of Baidu traded around $190.08 for a market cap of $66.18 billion and a price-earnings ratio of 19.84. According to the GF Value chart, the stock is modestly overvalued.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

The company has a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10. The Piotroski F-Score of 7 out of 9 and Altman Z-Score of 3.37 indicate the company is not likely to experience liquidity issues. The three-year revenue growth rate is 9.9%, while the three-year Ebitda growth rate is 13.2%.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Alphabet

The firm cut its Alphabet (NASDAQ:GOOGL) investment by 227,065 shares, or 63.81%, leaving a remaining holding of 128,782 shares. The trade had a -1.94% impact on the equity portfolio. During the quarter, shares traded for an average price of $1,975.79.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Based in Mountain View, California, Alphabet is a multinational conglomerate that was formed as part of a restructuring of Google in 2015, in which Alphabet became the parent company of Google and several former Google subsidiaries.

On May 21, shares of Alphabet traded around $2,295.00 for a market cap of $1.56 trillion and a price-earnings ratio of 30.59. According to the GF Value chart, the stock is modestly overvalued.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

The company has a financial strength rating of 8 out of 10 and a profitability rating of 9 out of 10. The interest coverage ratio of 261.49 and Altman Z-Score of 12.04 suggest a fortress-like balance sheet. The operating margin and net margin have been decreasing over the years, but at 22.59% and 22.06%, both metrics are outperforming 82% of other companies in the industry.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Advanced Micro Devices

The firm reduced its stake in Advanced Micro Devices (NASDAQ:AMD) by 3,485,608 shares, or 92.57%, leaving a remaining holding of 279,700 shares. The trade had a -1.56% impact on the equity portfolio. Shares traded for an average price of $86.23 during the quarter.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Advanced Micro Devices is a semiconductor company headquartered in Santa Clara, California. It develops computer processors and related technologies and also produces flash memory, graphics processors, motherboard chip sets and other components used in consumer electronic goods.

On May 21, shares of Advanced Micro Devices traded around $77.48 for a market cap of $94.13 billion and a price-earnings ratio of 32.98. According to the GF Value chart, the stock is modestly overvalued.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

The company has a financial strength rating of 8 out of 10 and a profitability rating of 5 out of 10. The cash-debt ratio of 5.66 and Altman Z-Score of 17.62 suggest the company should have no problem making its debt payments. The ROIC has recently risen above the WACC, indicating a turn to profitability in its growth efforts.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Portfolio overview

As of the quarter's end, the firm held common stock shares in 927 companies valued at a total of $21.41 billion.

The top holdings were Uber Technologies Inc. (NYSE:UBER) with 2.18% of the equity portfolio, Western Digital with 1.69% and Baidu with 1.63%. In terms of sector weighting, the firm was most invested in health care, technology and consumer cyclical.

Top 1st-Quarter Trades of Steven Cohen's Firm
Top 1st-Quarter Trades of Steven Cohen's Firm

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

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This article first appeared on GuruFocus.