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Steven Cohen's Top 5 Picks: IVZ, C, TWC, YUM, SHW

Charles Cliff

Charles Cliff

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Steve Cohen is a multi-billionaire, who founded and currently manages a $14 billion hedge fund, SAC Capital. In 2006, the Wall Street Journal referred to Cohen as “the hedge fund king.” Cohen graduated with a B.S. in Economics from the Wharton School at the University of Pennsylvania; however, Cohen has become notorious for having little regard for his alma mater, describing what he learned as “not much. A few things they taught you were helpful.” Cohen summarizes his investment philosophy in the ancient truism: Play to your strengths.

Cohen explains this philosophy in detail in a former interview with Business Insider: “You have to know what you are, and not try to be what you're not. If you are a day trader, day trade. If you are an investor, then be an investor. It's like a comedian who gets up on stage and starts singing. What's he singing for? He's a comedian. Here's one I really don't understand: I know these guys who set up a hedge fund that was part trading and part small cap. Small caps are incredibly illiquid, and you have to hold them forever — it's the exact opposite of trading!” When one works within their strongest areas, they can afford to take risks; and by taking risks, according to Cohen, one has the opportunity to make enormous profits. A trader cannot be “afraid to take risks,” Cohen said in a recent interview, “I want guys who have the confidence to be out there; to be risk takers.”

S.A.C. Capital Advisors L.P. is a private investment management firm headquartered in Stamford, Conn. SAC is comprised of several divisions, each deploying multiple strategies across a variety of industry sectors and asset classes. SAC has built a firm foundation in quick, often automated, trading. They have a diversified portfolio, their stocks numbering in the hundreds. SAC summarizes this approach on their corporate web site: “SAC is a diversified, research-driven investment management firm built around a premier position in long/short equity, as well as significant positions in quantitative and other strategies.” Recently, Steven Cohen at SAC Capital Advisors reported his Q4 portfolio. As of Dec. 31, 2010, SAC Capital Advisors owns 1,798 stocks with a total value of $13.9 billion.

Although continually optimistic about today’s economic climes, more recently, Cohen and S.A.C. Capitol Advisors L.P. have been shifting their focus to foreign investments. Cohen has been paying close attention to the development of Chinese markets, and the situations in Egypt and Lybia require special attention.

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Top Five Holdings in 2010 Ticker Percent Composition Number of Shares
Invesco Ltd IVZ 7.10% 35,571,574
Citigroup C 5.92% 150,984,614
Time Warner Cable Inc. TWC 5.04% 9,210,085
Yum Brands Inc. YUM 4.49% 11,047,700
Sherwin William Company SHW 4.35% 6,265,730


Invesco Ltd. (IVZ)

Invesco Ltd. is an independent global investment management company. Invesco provides a range of investment strategies and vehicles to its retail, institutional and high-net-worth clients globally. It has operations in the institutional and retail segments of the investment management industry in North America, Europe and Asia-Pacific, serving clients in 150 countries. On June 1, 2010, Invesco acquired Morgan Stanley’s retail asset management business, including Van Kampen Investments.

Their shares trade around $25.46, with a P/E ratio of 25.53 and an EPS of $1. In the last quarter of 2010, Invesco had revenue of $1.1 billion and a net income of $212 million. Over the past ten years, Invesco has had an average revenue growth of 7.3%. GuruFocus rated Invesco with the business predictability rank of 1-star.

Citigroup (C)

Citigroup Inc. is global diversified financial services holding company. Citigroup businesses provide consumers, corporations, governments and institutions with a range of financial products and services. The company has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citigroup operates two primary business segments: Citicorp, consisting of its Regional Consumer Banking businesses and Institutional Clients Group; and Citi Holdings, consisting of its Brokerage and Asset Management, Local Consumer Lending, and Special Asset Pool.

Their shares trade around $4.54, with a P/E ratio of 12.74 and an EPS of $0.36. In the last quarter of 2010, Citigroup had a net income of $1.1 billion. Over the past ten years, Citigroup has had an average revenue growth of -14%. GuruFocus rated Citigroup with the business predictability rank of 1-star.

Time Warner Cable Inc. (TWC)

Time Warner Cable Inc. is a cable operator in the United States with systems located in five geographic areas: New York State, the Carolinas, Ohio, Southern California and Texas. Time Warner Cable offers video, high-speed data and voice services over its broadband cable systems to residential and commercial customers. It serves approximately 14.5 million residential and commercial customers who subscribe to one or more of its three subscription services: video, high-speed data and voice, totaling approximately 26.7 million primary service units. It markets its services separately and in bundled packages of multiple services and features.

Their shares trade around $72.76, with a P/E ratio of 20.01 and an EPS of $3.64. In the last quarter of 2010, Time Warner Cable had revenue of $4.8 billion and a net income of $593 million.

YUM! Brands Inc. (YUM)

YUM! Brands Inc. is a quick-service restaurant company, with more than 37,000 units in more than 110 countries and territories. YUM! Brands — through its five concepts of KFC, Pizza Hut, Taco Bell, Long John Silver’s and A&W All-American Food Restaurants — develops, operates, franchises and licenses a worldwide system of restaurants, which prepare, package and sell a menu of competitively priced food items. In addition, the company owns non-controlling interests in entities in China who operate similar to franchisees of KFC and a non-controlling interest in Little Sheep. YUM! Brands develops, operates, franchises and licenses a worldwide system of both traditional and non-traditional QSR restaurants.

Their shares trade around $49.91, with a P/E ratio of 20.92 and an EPS of $2.39. In the last quarter of 2010, YUM had revenue of $3.5 billion and a net income of $386 million. Over the past ten years, YUM has had an average revenue growth of 8.8%. GuruFocus rated YUM! Brands with the business predictability rank of 4-star.

Sherwin Williams Company (SHW)

The Sherwin-Williams Company is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America, with additional operations in the Caribbean region, Europe and Asia. The company has three segments: paint stores group, consumer group and global finishes group.

Their shares trade around $84.78, with a P/E ratio of 20.18 and an EPS of $4.2. In the last quarter of 2010, Sherwin-Williams Company had revenue of $1.8 billion and a net income of $72 million. Over the past ten years, SHW has had an average revenue growth of 9.9%. GuruFocus rated Sherwin-Williams Company with the business predictability rank of 3-star.

To check the complete list of Top Growth Companies of Steven Cohen, please go to http://www.gurufocus.com/holdings.php?GuruName=Steven+Cohen&tab=growth

Also check out the Undervalued Stocks, Top Growth Companies, and High Yield stocks of Steven Cohen.

Rating: 4.5/5 (6 votes)

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