Steven Cohen (Trades, Portfolio), founder and CEO of Point72 Asset Management, increased his position in two holdings recently. He increased his holding in Fairmount Santrol Holdings Inc. (FMSA, Financial) by 21.2% on Dec. 7 and increased his position in Ophthotech Corp. (OPHT, Financial) by 128.9% on Dec. 8.
The billionaire hedge fund investor founded Point72 in 2014 as a successor to SAC Capital. He invests in discretionary long/short equities using fundamental bottom-up research.
After establishing the initial holding in Fairmount of 726,900 shares in the second quarter, he has gradually added to it. In the third quarter he purchased an additional 1,420,020 shares. Before his most recent transaction, he increased the position again on Nov. 11 by 435.3%.
Cohen purchased 2,436,440 shares for an average price of $9.27 per share on Dec. 7. The trade had an impact of 0.16% on the portfolio. He now holds a total of 13,928,121 shares.
Fairmount Santrol provides sand and sand-based products to the oil and gas industry. The sand, called a proppant, is used to enhance the productivity of wells. The company also provides sand-based solutions for foundries, building materials, glass, sports and recreation, water and other specialty products. The Ohio-based company has a market cap of $2.1 billion and an enterprise value of $2.9 billion. It has a price-sales (P/S) ratio of 2.8.
Likely due to the state of the oil industry, the company’s financial strength was ranked 3 of 10 by GuruFocus. The Piotroski F-Score of 3 and Altman Z-Score of 1.14 suggest the company is in poor condition and will possibly face bankruptcy in the near future. The cash-debt ratio of 0.2 is below the industry median of 0.5 and underperforms 66% of other companies in its industry.
GuruFocus ranked Fairmount’s profitability and growth 5 of 10. Both its margins and returns are negative. The operating margin and net margin underperform 78% and 74% of other companies in the global oil and gas equipment and services industry. The return on assets (ROA) and return on capital (ROC) underperform 76% and 73% of competitors.
Cohen is the largest shareholder of the company among the gurus. He holds 6.3% of outstanding shares, which represents 0.9% of his total assets managed. Barrow, Hanley, Mewhinney & Strauss, Jim Simons (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also hold positions.
The DCF Calculator gives the stock a fair value of $-13.7; it was trading at $9.52 on Friday.
After selling out of Ophthotech in the second quarter, Cohen again established a position in the third quarter with 786,300 shares. On Dec. 8, he purchased an additional 1,014,122 shares for an average price of $34.6 per share. The transaction had an impact of 0.3% on the portfolio, and he now holds a total of 1,800,422 shares.
Ophthotech is a biopharmaceutical company that develops novel therapeutics to treat dry and wet age-related macular degeneration (AMD). The New York-based company has a market cap of $173.5 million and a P/S ratio of 0.46.
GuruFocus ranked the company’s financial strength 7 of 10. The low Piotroski F-Score of 3 and Altman Z-Score of -2.3 indicate the company is in a poor business condition and may face bankruptcy in the near future. However, it has no debt.
As for profitability and growth, Ophthotech was ranked 3 of 10 by GuruFocus. The operating margin and net margin are both negative and underperform 65% of other companies. The return on equity (ROE) and ROA underperform 97% and 59% of other companies in the global biotechnology industry. Similarly, the ROC underperforms 71% of competitors.
Cohen is the largest shareholder of Ophthotech among the gurus with 5.04% of outstanding shares. This represents 0.44% of his total assets managed. Samuel Isaly (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Tudor Jones also hold positions.
The DCF Calculator gives the stock a fair value of $-49.44; it was trading at $5.24 on Friday.
Cohen currently holds a large number of oil and gas services stocks in his portfolio. Others include Tetra Technologies (TTI, Financial), Weatherford International (WFT, Financial) and Halliburton Co. (HAL, Financial). Cohen has a weight of 14.8% in the energy sector.
He also holds many biotechnology stocks. Among them are Achillion Pharmaceuticals (ACHN, Financial), Concordia International Corp. (CXRX, Financial) and Exelixis Inc. (EXEL, Financial). Cohen has a weight of 16.8% in the health care sector.
Disclosure: I do not own stock in any companies mentioned in the article.
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