Point72 Asset Management leader Steven Cohen (Trades, Portfolio) revealed late last week his firm upped its stake in Dave & Buster's Entertainment Inc. (PLAY, Financial) by 354.76% and increased its Fulcrum Therapeutics Inc. (FULC, Financial) position by 430.12%.
With the goal of generating superior risk-adjusted returns, the guru's Stamford, Connecticut-based firm invests in a wide range of asset classes worldwide. Its long-short strategy is based on bottom-up research processes focusing on fundamentals and macroeconomic conditions.
Dave & Buster's Entertainment
According to GuruFocus Real-Time Picks, a Premium feature, Cohen invested in an additional 2.7 million shares of Dave & Buster's on Sept. 17, impacting the equity portfolio by 0.25%. The stock traded for an average price of $14.12 per share on the day of the transaction.
He now holds a total of 3.45 million shares, which represent 0.32% of the equity portfolio. GuruFocus estimates Cohen has gained 16.26% on the investment since establishing it in the second quarter.
The Dallas-based restaurant and entertainment company has a $717.25 million market cap; its shares were trading around $15.65 on Monday with a price-book ratio of 2.83 and a price-sales ratio of 0.57.
On Sept. 10, the company reported its second-quarter results, which were "severely impacted by the effects of the Covid-19 pandemic" when compared to the prior-year quarter's results. It posted an earnings loss of $1.24 per share on $50.8 million in revenue, which was a 85% decrease from a year ago. Similarly, comparable store sales declined 87%.
Despite the disheartening results, CEO Brian Jenkins said he is "extremely pleased with the agility, resilience and commitment demonstrated by our team members" as Dave & Buster's has steadily begun to reopen its stores.
"We remain confident in our brand, our people, and our plan, and optimistic about our ability to emerge in an even stronger competitive position to deliver fun to our guests and value to our shareholders," he added.
GuruFocus rated Dave & Buster's financial strength 3 out of 10. As a result of issuing approximately $445.75 million in new long-term debt over the past three years, the company has poor interest coverage. The low Altman Z-Score of 0.57 also warns that it could be in danger of going bankrupt, especially since its assets are building up at a faster rate than revenue is growing.
The company's profitability fared much better, scoring an 8 out of 10 rating. Although the operating margin is expanding, Dave & Buster's is being weighed down by negative returns that underperform a majority of competitors. It also has a moderate Piotroski F-Score of 4, which implies business conditions are stable, but the predictability rank of four out of five stars is on watch as a result of a loss in operating income and declining revenue per share over the past 12 months. According to GuruFocus, companies with this rank return an average of 9.8% annually over a 10-year period.
With an 11.31% stake, Cohen is the company's largest guru shareholder. Richard Snow (Trades, Portfolio) also has a position in the stock.
Fulcrum Therapeutics
Cohen picked up 1.12 million additional shares of Fulcrum Therapeuctics, impacting the equity portfolio by 0.06%. Shares traded for an average price of $8.43 each on the day of the transaction.
The investor now holds 1.38 million shares total, which account for 0.08% of the equity portfolio. GuruFocus says he has lost an estimated 12.87% on the investment since establishing it in the second quarter.
Headquartered in Massachusetts, the biotech company, which focuses on treating genetic diseases, has a market cap of $232.53 million; its shares were trading around $8.51 on Monday with a price-book ratio of 1.89 and a price-sales ratio of 72.39.
Since its initial public offering in July 2019, the stock has tumbled over 30%.
On Aug. 11, the company reported its second-quarter results. It posted a net loss of $15.7 million for the quarter, which was not an improvement from the prior-year period. It also had $131.7 million in cash, cash equivalents and marketable securities, while research and development expenses came in at $12.8 million and general and administrative costs totaled $5.1 million.
In a statement, President and CEO Robert J. Gould, Ph.D, noted that the company not only made progress on its pipeline during the quarter, but also "expanded" into additional areas of critical unmet need, which included treating patients with Covid-19.
"And while our focus remains steadfast on improving the lives of patients with genetically defined rare diseases in areas of high unmet medical need, our scientific team saw a compelling rationale to use losmapimod for the treatment of hospitalized patients with COVID-19, and we recently initiated a Phase 3 international trial, with topline data expected in the first quarter of 2021," Gould said.
On the back of no long-term debt and comfortable interest coverage, Fulcrum's financial strength was rated 9 out of 10 by GuruFocus. The robust Altman Z-Score of 3.89 indicates the company is in good standing even though the Sloan ratio suggests it has poor earnings quality.
The company's profitability did not fare as well, scoring a 1 out of 10 rating as a result of negative margins and returns that underperform a majority of industry peers.
Cohen has a 5.03% stake in Fulcrum.
Portfolio composition
Cohen's $15.33 billion equity portfolio, which was composed of 778 stocks as of the three months ended June 30, is most heavily invested in the health care, technology and consumer cyclical sectors.
The guru's top five holdings as of the end of the second quarter were Amazon.com Inc. (AMZN, Financial), Alibaba Group Holding Ltd. (BABA, Financial), Merck & Co. Inc. (MRK, Financial), Fiserv Inc. (FISV, Financial) and NXP Semiconductors NV (NXPI, Financial).
Disclosure: No positions.
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