Steve Cohen has an estimated net worth north of $21 billion. Needless to say, he knows a thing or two about investing. Cohen founded S.A.C Capital Advisers in 1992 and transitioned the company’s operations to Point72 Asset Management in 2014 after the Securities and Exchange Commission charged S.A.C. with insider trading. Cohen still serves as co-chief investment officer at Point72 today.
Investors should never blindly invest based on positions held by large institutional investors like Cohen, because they invest with very different mindsets. But these investors are great to follow for new investment ideas and to check investment theses of your own (i.e., if someone is selling a stock in your portfolio).
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Recently, Cohen sold most of his stake in the chipmaker Broadcom (NASDAQ: AVGO) and piled into one that Warren Buffett long favored. Let’s take a look.
In the second quarter, Point72 sold more than 3 million shares in Broadcom, which equates to 67.5% of the fund’s total holdings in the stock. Point72 first began accumulating shares in Broadcom in 2018. While Point72 has been in and out of the stock, Broadcom has performed quite well since the hedge fund first bought shares.
The stock is also up about 50% this year and underwent a 10-for-1 stock split that went into effect in June. Companies typically do this to make their stock more appealing to smaller investors. With artificial intelligence (AI) all the rage this year, management probably didn’t want to miss out on retail interest due to its high share price.
AI stocks like Broadcom have contributed significantly to the bull run this year, which could face challenges if corporate earnings top out or inflation doesn’t come down as many expect. With the stock trading at close to 140 times trailing earnings, Cohen and the portfolio managers at Broadcom may have decided that it’s time to cash in their winnings. Additionally, executives at the company have been selling shares and analyst price targets currently suggest about 12% upside. That’s certainly nothing to sniff at, but the risk-reward proposition may not be as appealing as it’s been.
Cohen and Point72 opened a new stake in the second quarter in the consumer tech giant Apple (NASDAQ: AAPL), purchasing 1.57 million shares at roughly $186.50 apiece. This makes Apple the third-largest position in Point72’s portfolio. Cohen has been in and out of Apple over the years, but it’s a new position from the last time he sold it.
