Steve Cohen seeks alpha returns in an investment world dominated by algorithms and passive investors.
Billionaire Steve Cohen is among the most famous money manager in the world. Steve Cohen is renowned for his trading skills where he is able to go in and out of stocks in short time frame netting impressive profits.
Steve Cohen is also a successful long term investor where he has an uncanny habit of selecting stocks which outperform the indexes in the long term. Stephen Cohen’s SAC Capital has returned an eye-popping 30% annually for more than 20 years since its inception in 1992.
“Steve Cohen seeks alpha returns in an investment world dominated by algorithms and passive investors”
It seems Steve Cohen seeks alpha is a mountain that the billionaire investor has already climbed
The alpha trader/investor has an estimated net worth of $12 billion most of which is said to have come from buying and selling stocks.
Steve Cohen appears to have lost his mojo after he converted his fund into a family office
Steve Cohen investment performance slowed between 2008 and 2013, nevertheless, Steve Cohen’s 13F portfolio still managed to outperform the market in all market-cap brackets. Overall, Cohen Cohen’s 13F portfolio managed to outperform the market by 21 basis points per month during that period.
Steve Cohen’s sub-par performance became more evident when the investor converted his fund into a family office. This appears to be a growing trend where hedge funds close down to outside investors and resurface as family offices. For example, George Soros and Stanley Druckenmiller are as examples of hedge fund managers who had converted their fund management operations into family offices. John Paulson has also eyes exit.
“Steve Cohen appears to have lost his mojo after he converted his fund into a family office”
Steve Cohen seeks alpha following years of underperformance
Steve Cohen lost his winning streak after he converted his fund into a family office which was between Between 2014 and 2017.
During this period Cohen Cohen’s 13F portfolio underperformed the market by 34 basis points per month. That’s a reversal of 85 basis points per month compared with the 1999-2007 period. What’s more, none of the market-cap brackets in Cohen’s 13F portfolio managed to outperform the market between 2014 and 2017. In fact Steve Cohen top five mid-cap stocks actually lost an average of 18 basis points per month in a market that delivered an average monthly return of nearly 1%.
“Attracting top talent following an insider dealing scandal might not be easy for Steve Cohen”
Steve Cohen seeks alpha but he could find it challenging to replicate his past Stellar performance
Algorithms and passive investors are making it demanding for human traders to capture the volatility and make profits.
Another possible reason why Steve Cohen might find his previous top performance difficult to beat could be due to an insider-trading scandal in 2012 involving the employees of Steve Cohen’s fund. Attracting top talent following an insider dealing scandal might not be easy for Steve Cohen. Several of Cohen’s employees were found guilty of illegal insider trading, the fund pleaded guilty as well, and it was hit with a record $1.8 billion fine. Although Steve Cohen miraculously avoided being charged with illegal insider trading, he was banned from managing outside money for two years on the basis that he failed to appropriately supervise his subordinates.
So Steve Cohen was forced in 2016 to close down SAC Capital Advisors, he then spun off Point72 Asset Management in 2018. Steve Cohen was running this new fund as a family office waiting for the ban to expire, which occurred in January 2019. Point72 Asset Management managed around $11 billion in assets and generated a return of 15.5% in 2015.
The fund gained around 10% through September. But the final quarter of 2018 stock sell-off wiped out Steve Cohen’s gains and the fund generated losses of 2.8% in October and 4.3% in November.
“Steve Cohen has also cut his stake in Build-a-Bear Workshop stock (ticker: BBW) following the toy retailer disclosed fourth-quarter results, according to Barrons”
Despite the mishaps, Steve Cohen seeks alpha and is optimistic about his fund’s future
Steve Cohen has apparently been on the hunt for a team of talented professionals. A few months ago Steve Cohen employed managers from Balyasny Asset Management and he also hired staff from Morgan Stanley’s electronic trading desk. It was also revealed that Steve Cohen was planning to raise capital in Britain, but the UK financial regulators stepped in and blocked Steve Cohen’s fund raising campaign.
Remaining resolute Steve Cohen seeks alpha and has recently disclosed a number of large positions
Steve Cohen recently disclosed owning 8.2% of SunOpta Inc. STKL, +0.86% which was enough to make the stock jump by as much as 7%. Moreover, trading volume doubled following the disclosure. Investors (and no doubt the regulatory authorities) are closely monitoring Steve Cohen trades.
Steve Cohen has also cut his stake in Build-a-Bear Workshop stock (ticker: BBW) following the toy retailer disclosed fourth-quarter results, according to Barrons.
Steve Cohen’s Point72 Asset Management sold 2 million shares of the stuffed-toy retailer last week, slashing its stake by two-thirds.
Build-a-Bear said on the morning of March 13 that it was in the red for the fourth quarter after recording a profit in the year-earlier period. Revenue also fell.
The company blamed uncertainty caused by Brexit (The UK is its largest market outside the US) and the liquidation of the Toys “R” Us chain, among other factors.
Steve Cohen’s Point72 Asset Management sold 2.05 million Build-a-Bear shares on March 13 and 14 for $10.5 million, an average price per share of $5.11, according to a form filed with the Security Exchange Commission.
That sent the toy retailer stock into a tailspin with shares slashing 11% of their value the next day.
Steve Cohen seeks alpha and keeping an eye on his trades could also give traders/investors a heads up.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.