Guru Steven Cohen is the founder of Point72 Asset Management. The firm is headquartered in Stamford, Connecticut and maintains affiliated offices in New York, London, Hong Kong, Tokyo and Singapore. Point72 was founded in 2014 as a family office that manages Cohen’s multi billion dollar fortune after Cohen’s original hedge fund SAC Capital pleaded guilty to insider trading related charges. Point72 currently has approximately 1,000 employees, including more than 250 investment professionals. The firm currently owns 666 stocks with a total value of $12.124 billion.
In the first quarter of 2016, Steven Cohen (Trades, Portfolio) added 5,615,988 shares of Rice Energy (RICE, Financial) to his portfolio.
Rice Energy is an independent natural gas and oil company engaged in the acquisition, exploration and development of natural gas and oil properties in the Appalachian Basin. The company's main customers include Sequent Energy Management and Dominion Field Services. Rice Energy operates in two business segments, which are managed separately due to their distinct operational differences - the Exploration and Production segment and the Midstream Segment. The Exploration and Production segment is responsible for the acquisition, exploration and development of natural gas, oil and NGL properties in the Appalachian Basin. The Midstream segment is engaged in the gathering and compression of natural gas, oil and NGL production, and in the provision of water services to support the well completion services of the company and third parties in the Appalachian Basin.Â
Rice Energy has a market cap of $1.74 billion, an enterprise value of $3.67 billion, a P/B ratio of 1.37 and a dividend yield of 3%.
Below is a Peter Lynch chart for Rice Energy Inc.
The following is a list of reasons why Cohen may have decided to heavily invest in Rice Energy Inc taken from the company's most recent form 10K.
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| • | The company increased average production from 2014 pro forma production to 552 MMcfe/d in 2015, a 101% increase. |
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| • | The company has achieved significant growth in average midstream throughput to 894 MDth/d, a 122% increase above 2014. |
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| • | Rice Energy completed their first Pennsylvania Utica well in Greene County, Pennsylvania. |
Additionally, Rice Energy has been able to successfully drill and complete four Upper Devonian horizontal wells on the company's Marcellus Shale acreage with a 100% success rate.Â
Rice Energy has been able to expand their operations successfully despite the high volatility that they have been experiencing with fluctuating oil prices. I believe that Cohen understands that there are variables that are outside of the company's control with fluctuating oil prices. Cohen is an avid poker player who deeply understands the element of taking risk. If oil prices drastically increase in the future, there is a good chance that Rice Energy's market price will also increase.
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