Steven Cohen (Trades, Portfolio), founder and CEO of Point72 Asset Management, generates “superior risk-adjusted returns” by investing in discretionary long/short equities using a fundamental bottom-up research process.
During the third quarter, Cohen increased his weight in the technology sector by a net 7.5% to 13%. The guru invested in three online media companies, one consumer electronics company and one communication services company.
Alphabet Inc. (GOOG, Financial) (GOOGL, Financial)
Cohen purchased 419,288 shares of GOOGL and 111,491 shares of GOOG. Google’s Class A stock averaged $782.19 per share while the Class C stock averaged $759.42 per share.
The California-based online company has a financial strength rank of 8 and a profitability rank of 9, both suggesting a robust business operation. Even though the company has a predictability rank of just 3.5 stars, the company has consistent per-share revenue growth and strong returns on invested capital. Google’s operating margin and return on assets outperform over 80% of global Internet content and information companies.
Ruth Porat, chief financial officer of Google, acclaimed the company’s strong core advertising business through mobile search and video in the company’s third-quarter earnings report. Operating margin based on generally accepted accounting principles (GAAP) increased 1% from third-quarter 2015 to third-quarter 2016 while GAAP net income increased over $1 billion. This resulted in a $2 increase in diluted earnings per share.
As the company exhibited strong growth potential, several gurus invested in Google. Andreas Halvorsen (Trades, Portfolio), who currently has the second-largest stake of GOOGL, added 168,202 Class A shares while Chase Coleman (Trades, Portfolio) purchased 283,877 Class C shares. The latter expanded his portfolio by 3.18%.
Comcast Corp. (CMCSA, Financial)
Cohen purchased 2,048,200 shares of Comcast, a Pennsylvania media and technology company. The price averaged $66.56 per share during the third quarter.
Even though the company has poor financial strength, the company’s profitability ranks 10 out of 10, and its predictability ranks 4 out of 5. Comcast has a Piotroski F-score of 8, and its operating margin outperforms 86% of global pay TV companies.
Comcast, which controls NBC, reported double-digit revenue and operating cash flow growth for the third quarter, as mentioned in the company’s earnings report. CEO Brian Roberts presented likely sources for the strong third-quarter revenue growth including the 2016 Rio Olympics, "The Secret Life of Pets" and continued growth at the company’s theme parks. The number of video subscribers increased over 170,000 during the trailing 12 months.
As the company presents high growth potential, Coleman added 2,635,039 Comcast shares to his portfolio.
Guru adds to three other online companies
The Point72 hedge fund manager boosted his stakes in Facebook Inc. (FB, Financial) and Apple Inc. (AAPL, Financial), purchasing 2,024,308 shares of the former and 1,029,492 shares of the latter. The companies averaged $124.14 and $105.87 per share.
As discussed in a previous article, David Tepper (Trades, Portfolio) invested in both Facebook and Apple as the companies reported strong third-quarter earnings performance. Facebook increased its revenues and daily active users during the quarter while Apple had strong service revenue albeit declining iPhone sales. As both companies show high value potential, Daniel Loeb (Trades, Portfolio) purchased 1.7 million shares of Facebook and 2.5 million shares of Apple.
Cohen also added 2,481,947 shares of Yahoo Inc. (YHOO, Financial), a California-based online media company. The stock averaged $41.01 during the third quarter.
See also
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Disclosure: The author has no position in the stocks mentioned in this article.
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