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Steven Cohen Adds Amarin Corp., Buys Hyatt Hotels
Posted by: Holly LaFon (IP Logged)
Date: March 28, 2012 10:12PM
Steven Cohen is the founder of Stamford, Conn.-based SAC Capital, a $14 billion hedge fund where he returned almost 30% on annual average over the last 20 years. When asked about his investment tenets at the 2011 SALT conference, Cohen responded, “Risk management is really important. Obviously we do an incredible amount of fundamental work. But you have to combine the two because things go wrong and you have to be flexible.” His portfolio is diversified with consumer services, oil & gas and technology occupying 15.1%, 13.1% and 11.4% of it, respectively. The firm is large, and Cohen actually manages less than 10% of its capital.
Cohen’s latest big trades involve hotels and a drug awaiting FDA approval, according to GuruFocus Real Time Picks. On March 14, SAC Capital bought Hyatt Hotels (H) and added to its position in Amarin Corp. Plc (AMRN).
Hyatt Hotels (H)
SAC has dabbled in Hyatt stock in the past, buying several thousand shares and selling the next quarter. His latest purchase was his first major investment. He bought 2,804,400 shares at an average price of $40 per share.
Cohen’s purchase price is near the stock’s 52-week high of $45.72 it reached in May. The price then dipped to near a $52-week low of $29.18 in the third and fourth quarters of 2011.
Hyatt’s stock tumbled in the second quarter around the time that the company had an egregious PR infraction. An unidentified manager on July 21 turned heat lamps on under a hotel canopy where workers were picketing during a heat wave. The event happened during a demonstration by Unite Here in Chicago, a union representing numerous housekeepers in Hyatt hotels, that was hosting similar demonstrations in several cities against what it called unfair working conditions. The union in Chicago had already been in labor negotiations with Hyatt for 22 months at the time of the protest, according to the Chicago Tribune.
In the meantime on August 4, Hyatt announced earnings per share of $0.22 per share, compared to $0.14 per share in the same quarter of 2010. Analysts on average were expecting earnings of 15 cents per share. Third quarter net income fell to $0.08 per share and revenue increased 3.3%, and the stock began to increase. Fourth-quarter net income jumped to $0.31 per share, and revenue for the year increased to $1.89 billion from $1.86 billion.
Hyatt has been a public company since 2009 and its current P/E ratio of 63.87 is hear its all-time high. It initially priced shares at $28, and earnings have been growing each year. On Monday it is trading for $42.83 per share.
Amarin Corp. Plc (AMRN)
Cohen added 1,511,552 shares of Amarin Corp. Plc at an average price of $7.90 on March 14. He now owns 3,439,549 shares. Cohen’s first trade with Amarin was a purchase of 454,472 shares at an average of $4.50 per share in the fourth quarter of 2011. He added 453,528 shares in the first quarter when the stock nearly doubled to $9 per share, and another 2,941,839 shares in the second quarter of 2011 at an average of $15 per share. In the third quarter, he sold 1,927,997 shares at an average price of $12 per share.
Amarin Corp. is a late-stage biopharmaceutical company focusing on the treatment of cardiovascular disease. It is working on AMR101, a prescription-grade omega-3 fatty acid for the treatment of patients with very high triglyceride levels who are also on statin therapy for LDL-cholesterol levels.
Amarin has been a public company since 1993. Its stock traded for just several dollars from 2008 to most of 2010, when Cohen began buying. Around that time, the company announced that it had positive top-line data for its Phase 3 MARINE study, where it showed to effectively lower triglyceride levels in patients with very high triglycerides without driving up LDL-C. Then, it completed a patient randomization for its ANCHOR trial, a pivotal Phase 3 trial for AMR101.
Positive results from another trial in April sent the stock up significantly. Approximately 1 in 50 adults in the U.S. have very high triglyceride levels (≥500 mg/dL) and approximately 1 in 5 adults in the U.S. have triglyceride levels ≥200 mg/dL. Amarin believes that the market opportunity for AMR101 is potentially greater than $1 billion per year in the U.S., with more potential worldwide.
The company expects to have commercial readiness including market preparation to launch AMR101 in 2012 and to have patent protection that could possibly extend to 2030. It achieved the latter goal on March 20, when the US Patent and Trademark Office (USPTO) awarded its patent.
Amarin has been operating at a loss for the last five years and has total cash of $117 million on its balance sheet, with $123 million in long-term liabilities and no long-term debt.
See what else Gurus are buying and selling at GuruFocus Real Time Picks. Also see the stock portfolio of Steven Cohen.
Guru Discussed: Steven Cohen: Current Portfolio, Stock Picks
Stocks Discussed: H, AMRN,