Steven Cohen (Trades, Portfolio)’s Point72 Asset Management recently disclosed its 13F portfolio updates for the fourth quarter of 2022, which ended on Dec. 31.
Point72 is a hedge fund that was formed in 2014 when SAC Capital Advisors converted its investment operations into a family office. In 2018, the firm re-opened to external investors. Point72 invests via a wide range of asset classes and strategies worldwide. Its core investing strategy is based on bottom-up research with a focus on fundamentals and macroeconomic conditions. Steven Cohen (Trades, Portfolio) serves as the President, CEO and Chairman of the firm.
According to its latest 13F report, the firm was loading up on shares of several tech stocks in the fourth quarter following big declines. Its top new tech buys for the quarter were Salesforce Inc. (CRM, Financial), Netflix Inc. (NFLX, Financial) and NetApp Inc. (NTAP, Financial).
Investors should be aware that 13F reports do not provide a complete picture of a guru’s holdings. They include only a snapshot of long equity positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They do not include short positions, non-ADR international holdings or other types of securities. However, even this limited filing can provide valuable information.
Salesforce Inc.
The firm established a new stake worth 3,345,741 shares in Salesforce Inc. (CRM, Financial), giving it a weight of 1.53% in the equity portfolio. During the quarter, shares traded for an average price of $145.92.
Salesforce is a subscription-based cloud software provider headquartered in San Francisco, California. It provides corporate customers with market-leading sales, marketing, customer relationship management, analytics and application development tools.
While Salesforce is still consistently seeing revenue growth, its earnings really haven’t improved overall since 2018, potentially proving the boost from the Covid-related work-from-home environment to be temporary. However, a cohort of activist investors in the stock appears to think the issue could be due more to the company’s management structure and growth strategy, and they could be gearing up for a proxy fight, so a catalyst for change is on the horizon.
Netflix Inc.
Point72 also loaded up on 718,596 shares of Netflix Inc. (NFLX, Financial), giving the stock an equity portfolio weight of 0.73% at the quarter’s average share price of $280.49.
Founded in 1997 as a DVD mail rental service, Netflix Inc. (NFLX, Financial) grew to become the first subscription streaming giant. The company typically acquires new content through licensing or in-house production, and availability can vary by popularity, cost of licensing, seasonality, etc.
It’s no secret that Netflix has been knocked off its growth stock pedestal following the pull-forward in demand resulting from the Covid-19 pandemic. Having reached market saturation in its home country and facing competition after years of being uncontested, Netflix reported its first-ever subscriber loss in April 2022. Going forward, growth will depend mostly on cost-cutting measures and international expansion, but there is also hope in the form of the newly-introduced ad-supported subscription. Overall, some see the truncated price-earnings ratio of 31.36 to be an overreaction.
NetApp Inc.
The firm bought 2,879,887 shares of NetApp Inc. (NTAP, Financial), giving it a weight of 0.60% in the equity portfolio. Shares changed hands for an average price of $66.29 during the quarter.
NetApp is a hybrid cloud services and data management company headquartered in Sunnyvale, California. Its cloud data services can be used for managing applications and data both online and physically.
NetApp has the only enterprise-grade storage operating system that is available natively on the biggest public clouds in the world, and it also boasts to-notch security as well as CloudOps services to assist customers with their work in the cloud. Despite having margins that beat over 92% of industry peers, the stock has a price-earnings ratio of just 11.25, but that seems justified for now given it hasn’t really grown its bottom line since 2019. Any return to growth could signal a turnaround for the stock.
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Point72’s other top buys of the quarter included a new position in petroleum refiner Suncor Energy Inc. (SU, Financial) and additions to Meta Platforms Inc. (META, Financial) and Broadcom Inc. (AVGO, Financial). The firm also reduced its T-Mobile US Inc. (TMUS, Financial) investment and sold out of Palo Alto Networks Inc. (PANW, Financial).
As of the quarter’s end, the firm’s 13F equity portfolio consisted of 1,423 stocks valued at a total of $28.95 billion. The top holding was Meta with 1.93% of the portfolio, followed by Broadcom with 1.55% and Salesforce with 1.53%.
In terms of sector weighting, the firm was most invested in health care, technology and consumer cyclical stocks.
