Steven Cohen's Top 4th-Quarter Trades

Guru boosts 2 top holdings

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Graham Griffin
Feb 23, 2021
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Steven Cohen (Trades, Portfolio), CEO and President of Point72 Asset Management, has revealed his portfolio for the fourth quarter of 2020. Major trades include selling out of his holdings in Alibaba Group Holding Ltd. (

BABA, Financial) and Palantir Technologies Inc. (PLTR, Financial) as well as additions to the portfolio's top holdings in Alphabet Inc. (GOOGL, Financial) and Advanced Micro Devices Inc. (AMD, Financial). The guru also reduced his Amazon.com Inc. (AMZN, Financial) holding during the quarter.

Cohen's Point72 was formed as a hedge fund in 2014 when SAC Capital Advisors converted its investment operations into a family office. In 2018, the firm reopened to external investors. The firm invests via a wide range of asset classes and strategies worldwide to generate superior risk-adjusted returns. Its long-short strategy is based on bottom-up research with a focus on fundamentals and macroeconomic conditions.

Portfolio overview

At the end of the quarter, Cohen's portfolio contained 879 stocks, with 323 new holdings. It was valued at $20.50 billion and has seen a turnover rate of 41%. Top holdings at the end of the quarter were Alphabet, AMD, Facebook Inc. (

FB, Financial), Visa Inc. (V, Financial) and Microsoft Corp. (MSFT, Financial).

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By weight, the top three sectors represented are technology (22.75%), health care (19.84%) and consumer cyclical (12.89%).

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Alibaba

The fourth quarter saw Cohen sell out of his holding in Alibaba (

BABA, Financial). The 1.40 million shares that were sold traded at an average price of $277.43 during the quarter. Overall, the sale had a -2.12% impact on the portfolio and GuruFocus estimates the total gain of the holding at 25.83%.

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Alibaba is the world's largest online and mobile commerce company, measured by GMV. It operates China's most-visited online marketplaces, including Taobao and Tmall. Alibaba's China marketplaces accounted for 68% of revenue in fiscal 2019, with Taobao generating revenue through advertising and other merchant data services and Tmall deriving revenue from commission fees. Additional revenue sources include international retail/wholesale marketplaces (7%), cloud computing (7%), digital media and entertainment platforms (6%), Cainiao logistics services (4%), and innovation initiatives/other (1%). Mobile GMV accounted for roughly 85% of consolidated GMV in fiscal 2019.

On Feb. 23, the stock was trading at $254.26 per share with a market cap of $687.65 billion. According to the GF Value Line, the stock is trading at a modestly undervalued rating.

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GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rank of 8 out of 10. There are currently two severe warning signs issued for declining gross and operating margin percentages. Despite the severe warning sign, the company's operating margin of 16.45% still ranks it better than 93.14% of the industry.

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Amazon

During the quarter, Cohen slashed his Amazon (

AMZN, Financial) holding by 70.27% with the sale of 110,480 shares. The shares traded at an average price of $3,191.09 during the quarter. GuruFocus estimates the total gain of the holding at 39.90% and the reduction had an impact of -1.78% on the portfolio overall.

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Amazon is a leading online retailer and one of the highest-grossing e-commerce aggregators, with $386 billion in net sales and approximately $482 billion in estimated physical/digital online gross merchandise volume, or GMV, in 2020. Retail related revenue represented approximately 83% of total, followed by Amazon Web Services' cloud computing, storage, database and other offerings (12%) and advertising services and co-branded credit cards (6%). International segments constituted 27% of Amazon's non-AWS sales in 2020, led by Germany, the United Kingdom and Japan.

As of Feb. 23, the stock was trading at $3,194.50 per share with a market cap of $1.61 trillion. The GF Value Line shows the stock trading at fair value.

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GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 8 out of 10 and a valuation rank of 3 out of 10. There is currently one severe warning sign issued for assets growing faster than revenue. Revenue has increased constantly and the company has seen positive net income since 2015.

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Palantir

The guru also sold all his shares of Palantir (

PLTR, Financial), which had a short lifetime in the portfolio. The 29.9 million shares that made up the holding traded at an average price of $18.02 per share during the quarter. Overall, the sale had an impact of -1.45% on the portfolio and GuruFocus estimates the total gain of the holding at 89.68%.

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Palantir provides organizations with solutions to manage large disparate data sets in an attempt to gain insight and drive operational outcomes. Founded in 2003, Palantir released its Gotham software platform in 2008, which focuses on the government intelligence and defense sectors. Palantir expanded into various commercial markets with its Foundry software platform in 2016 with the intent of becoming the data operating system for companies and industries. The Denver-based company had 125 customers as of its initial public offering and roughly splits its revenue between commercial and government customers.

The stock was trading at $26.57 per share with a market cap of $50.23 billion on Feb. 23. There is not enough data to display a GF Value Line or Peter Lynch chart.

GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rank of 1 out of 10. There is currently one severe warning sign for a Sloan ratio indicating poor quality of earnings. The company's weighted average cost of capital for exceeds the return on invested capital, meaning it has issues creating value.

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Alphabet

Cohen boosted his long term holding in Alphabet (

GOOGL, Financial) with the purchase of 152,029 shares. The purchase added 74.59% to the holding and the shares traded at an average price of $1,685.58 during the quarter. GuruFocus estimates the total gain of the holding at 15.09% and the purchase had a 1.30% impact on the portfolio.

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Alphabet is a holding company, with Google, the internet media giant, as a wholly-owned subsidiary. Google generates 99% of Alphabet revenue, of which more than 85% is from online ads. Google's other revenue is from sales of apps and content on Google Play and YouTube, as well as cloud service fees and other licensing revenue. Sales of hardware such as Chromebooks, the Pixel smartphone and smart homes products, which include Nest and Google Home, also contribute to other revenue. Alphabet's moonshot investments are in its other bets segment, where it bets on technology to enhance health (Verily), faster Internet access to homes (Google Fiber), self-driving cars (Waymo) and more. Alphabet's operating margin has been 25% to 30%, with Google at 30% and other bets operating at a loss.

On Feb. 23, the stock was trading at $2,060.12 per share with a market cap of $1.39 trillion. According to the GF Value Line, the stock is trading at a modestly overvalued rating.

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GuruFocus gives the company a financial strength rating of 8 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 3 out of 10. There are currently three severe warning signs issued for assets growing faster than revenue and declining gross and operating margin percentages. The company has consistently increased cash levels over the last decade and a cash-to-debt ratio of 5.11 ranks it better than 51.19% of competitors.

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AMD

Rounding out Cohen's top five trades is an addition to his AMD (

AMD, Financial) holding. The guru boosted the holding by 184.24% with the purchase of 2.44 million shares. During the quarter, the shares purchased traded at an average price of $86.32. Overall, the purchase had an impact of 1.09% on the portfolio and GuruFocus estimates the total gain of the holding at 24.58%.

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AMD designs and produces microprocessors for the computer and consumer electronics industries. The majority of the company's sales are in the computer market via CPUs and GPUs. AMD acquired graphics processor and chipset maker ATI in 2006 in an effort to improve its positioning in the PC food chain. In 2009, the company spun out its manufacturing operations to form a foundry joint venture, GlobalFoundries. In 2020, it agreed to acquire FPGA-leader Xilinx.

As of Feb. 23, the stock was trading at $84.74 per share with a market cap of $102.65 billion. The stock is significantly overvalued according to the GF Value Line.

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GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rank of 5 out of 10. There are currently three severe warning signs issued for assets growing faster than revenue, a Sloan ratio indicating poor quality of earnings and a Beneish M-Score indicating the company may manipulate its financials. 2020 saw cash flows jump significantly after the company struggled for many years.

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Disclosure: Author owns no stocks mentioned.

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