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Dianne Tordillo
Dianne Tordillo
Articles (179)  | Author's Website |

Stevie Cohen On Board with Real Estate Betting, Despite SEC Probe

January 18, 2013 | About:

The investigations that the Securities and Exchange Commission has been performing on Guru investor Steven Cohen’s hedge fund, SAC Capital, have been ongoing for several months now, alleging (some confirming true) that some former and current SAC portfolio managers have committed securities fraud through sharing nonpublic information from company insiders to acquire stocks. However, this has not stopped the hedge fund from continuing on with its betting.

Yesterday, a 13G filing by SAC Capital Advisors revealed it had purchased more shares of commercial real estate finance company, Colony Financial Inc. (CLNY) – a whole lot more. Adding more than 2.9 million shares to its current stake, the transaction was an 866.71 percent increase, according to GuruFocus Real Time Picks.

Colony Financial is engaged in acquiring, originating, investing in, financing and managing a portfolio of real estate-related debt investments, primarily focusing on commercial mortgage loans, real estate owned properties and mezzanine loans, to name a few.

When SAC first acquired the stock in the third quarter of last year, it only placed the hedge fund at 0.82 percent ownership; SAC now sits with 5.2 percent stake in the company after the recent transaction.

Colony’s presence in the market has experienced an attractive turnaround in the past year. At the end of 2011, Colony’s stock price started to show light, rising all throughout 2012, on its way to a one-year high. Before the year ended, even insiders decided to get their money’s worth from the stock’s increasing market value, making a concentrated sale of more than 91,000 shares combined between six of Colony’s executive officers.

In unison with the increasing optimism in real estate recovery, Colony’s price continued to soar even after the concentrated sale.

In the past 12 months, Colony has felt a revenue growth rate of 17.9 percent, and an EBITDA growth rate of 16.8 percent, according to 10-Year Financials.

Last week, Colony Financial announced a public offering of 10 million shares of its common stock, and granting its underwriters an option to purchase an additional 1.5 million. The company intends to use at least $45 million of the net proceeds from the offering to make additional investments in single-family homes through its affiliation with CSFR Operating Partnership L.P.

SAC Capital is not the only one putting its money on Colony Financial, and real estate investing in general.

Guru Louis Moore Bacon of Moore Capital Management also joined Cohen in buying the stock new in the third quarter. In the same period, Jim Simons of Renaissance Technologies added to his stake in Colony Financial, after doing the same in the previous quarter and introducing the stock to his portfolio in the first quarter.

Earlier this month, the Oracle of Omaha, Warren Buffett expanded his real estate presence through Berkshire Hathaway real estate branch, Berkadia Commercial Mortgage, by acquiring real estate adviser, Hendricks & Partners.

Around the same time, CEO Jim Thomas of real estate company Thomas Properties Group (TPGI) was swayed by his company’s rising price value and added onto his now 3.1 million shares.

The real estate sector represents only 1.4 percent of SAC Capitals’ 1,490-stock portfolio.

Some of the fund’s top holdings are Sirius XM Radio (NASDAQ:SIRI), American International Group (NYSE:AIG), Tiffany & Co. (NYSE:TIF) and Gilead Sciences (NASDAQ:GILD).

View Steven Cohen’s portfolio details here. Also view his undervalued stocks, top growth companies and high yield stocks here.

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About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website

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