In 1978, after graduating from Wharton, Stevie got a job as a junior trader in the options arbitrage department at Gruntal & Co. By 1984, he was making the firm around $100,000 a day while running his own trading within Gruntal. At 36, with $20 million of his own money, he started SAC Capital Partners. Today the firm manages $8.78 Billion. To get involved (as an investor) with SAC Capital is reported to cost you over 50% of your profits, so it makes much better sense to follow his stock ideas third-party. At least, it makes more sense in my opinion.
For the last 18 years SAC Capital has averaged around 30% a year for their clients. In January, Cohen hosted a golf outing for 24 people in West Palm Beach to discuss openly the fund’s performance. The openness of Mr. Cohen came after former hedge fund manager Bernie Madoff was arrested on fraud charges. The outing was reported on by Bloomberg News and can be found in the Washington Post last month at this link:
Previously, they were ranked #17 in Barron's hedge fund top 100 rankings. SAC's website earlier this year had the following quote: “SAC is a multi-strategy, private asset management firm founded by Steven A. Cohen in 1992 with 9 employees and $25 million in assets under management. As of July 2008, the firm has grown to over 800 employees with approximately $14 billion in assets under management. SAC's initial investment style was "trading" oriented. However, we have evolved into a multi-strategy, multi-disciplinary, investment management firm emphasizing rigorous research and risk management practices. SAC's investment strategies include, but are not limited to: Fundamental and Technical Long/Short Equity Portfolios, Global Quantitative Strategies, Fixed Income and Credit, Global Macro Strategies, Convertible Bonds, and Emerging Markets.”
SAC Capital runs what amounts to roughly 100 small funds within a large structure. Each manager has the ability to make their own decisions. Thus, many of the stocks at GuruFocus.com under Steve Cohen are probably not even his trades. Nonetheless, the performance has been stellar. With over 1783 stocks, it's hard to say that they are focused on one area over another.
With that said, there has been a trend toward Technology, Consumer Services, Basic Materials and Health Care for SAC Capital while moving away from Financials and Industrials. This is a trading organization, so these trends could move rapidly in the coming months.
For more details on Steven Cohen, go to http://www.gurufocus.com/ListGuru.php?GuruName=Steven+Cohen
In this article, I'd like to share with you some of SAC's best holdings based on their earnings yield and current price in the market. The reason these are important come down to growth in your portfolio and buying at prices that are undervalued. I've gone through and found the Low P/E stocks that also offer an added margin of safety based on their current price. SAC Capital owns 1783 stocks with a total value of $8.78 billion as of December 31, 2009.
Five of SAC Capital's Highest Earnings Yielding Stocks:
No. 1: Excel Marinetime Carriers (EXM), Weightings: 0.01% - 54,893 Shares
No. 2: Mirant Corp. (MIR), Weightings: 0.01% - 69,859 Shares
No. 3: Paragon Shipping Inc. (PRGN), Weightings: 0.01% - 26,500 Shares
No. 4: Fuqi International (FUQI), Weightings: 0.01% - 10,850 Shares
No. 5: China Security & Surveillance (CSR), Weightings: 0.01% - 73,791 Shares
No. 1: Excel Marinetime Carriers (EXM)
EXCEL MARITIME CARRIERS LTD is an owner and operator of dry bulk carriers and a provider of worldwide seaborne transportation services for dry bulk cargoes, such as iron ore, coal and grains, as well as bauxite, fertilizers and steel products. Excel Maritime Carriers Ltd. has a market cap of $473.8 million; its shares were traded at around $5.94 with a P/E ratio of 2.2 and P/S ratio of 0.6.
Not only is Excel Marinetime trading with a forward P/E of 8.26, the company is priced well below their annual high of $11.70. Granted the company operates out of Greece, so many investors may be shy about getting into the stock. This could be warranted or not, but with a yield over 10%, and a market value lower than their annual sales, the stock looks very attractive.
Steven Cohen (SAC) owns 54,893 shares as of 12/31/2010, which accounts for 0.01% of the $8.78 billion portfolio.
No. 2: Mirant Corp. (MIR)
Mirant is a competitive energy company that produces and sells electricity in the United States, the Caribbean, and the Philippines. Mirant Corp. has a market cap of $1.66 billion; its shares were traded at around $11.54 with a P/E ratio of 3.1 and P/S ratio of 0.7.
Mirant is trading 10% off their annual low and despite being sold short by 10% of the institutions; the company still offers a very good forward earnings yield in the range of 14%.
Steven Cohen (SAC) owns 69,859 shares as of 12/31/2010, which accounts for 0.01% of the $8.78 billion portfolio.
No. 3: Paragon Shipping Inc. (PRGN)
Paragon Shipping Inc. is an Athens, Greece-based international shipping company specializing in the transportation of drybulk cargoes , including iron ore, coal, grain, bauxite, phosphate, and fertilizers. Paragon Shipping Inc. has a market cap of $228.3 million; its shares were traded at around $4.46 with a P/E ratio of 3.8 and P/S ratio of 1.5. The dividend yield of Paragon Shipping Inc. stocks is 4.5%.
It seems a lot of the Greek companies are trading with very low current P/E multiples. Paragon has only a 23.70% institutional ownership and like Excel Marinetime is priced well below their annual high. Plus, the company is trading with a forward P/E multiple just over 10.
Steven Cohen (SAC) owns 26,500 shares as of 12/31/2010, which accounts for 0.01% of the $8.78 billion portfolio.
No. 4: Fuqi International (FUQI)
Based in Shenzhen, China, FUQI International, Inc. is a designer of high quality precious metal jewelry in China, developing, promoting, and selling a broad range of products in the large and rapidly expanding Chinese luxury goods market. Fuqi International Inc. has a market cap of $248.7 million; its shares were traded at around $9 with a P/E ratio of 4.3 and P/S ratio of 0.7.
Fuqi International has been under investigation by many different law firms for possibly mistating certain numbers on the company's financial statements. The company's stock has taken a beating this year down from $32.68 a 70% drop in price. This is a new position for SAC Capital and one that looks to be well warranted given its current earnings yield of 18%.
Steven Cohen (SAC) owns 10,850 shares as of 12/31/2010, which accounts for 0.01% of the $8.78 billion portfolio.
No. 5: China Security & Surveillance (CSR)
CHINA SECURITY & SURVEILLANCE TECHNOLOGY INC is a Chinese security corporation listed on the NYSE under the ticker symbol in United States. China Security & Surveillance Technology has a market cap of $368.5 million; its shares were traded at around $5.38 with a P/E ratio of 4.5 and P/S ratio of 0.6.
Analysts have been predicting a fall in the Chinese economy since the beginning of the year with concerns of the housing bubble and inflation worries reaching all industries. CSR has dropped 2 points since the end of April, yet with a book value of $7.17, a forward earnings yield close to 22%, and a great business model, the stock looks undervalued.
Steven Cohen (SAC) owns 73,791 shares as of 12/31/2010, which accounts for 0.01% of the $8.78 billion portfolio. SAC Capital has upped its shares by 253% since the last report.
The stocks highlighted above are only what I feel are the best ideas still mispriced within this guru's portfolio. No one cares more about your money than you do. And, by using GuruFocus.com anyone can find stocks that fit their personal investment criteria. Remember, that you shouldn’t always follow the guru’s, but learn from both their mistakes and their success to become a better investor.
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