On Tuesday, the 22nd annual Institutional Investor’s Rich List revealed that hedge fund giants Steven Cohen (Trades, Portfolio), head of Point72 Asset Management, and Appaloosa Management’s David Tepper (Trades, Portfolio) were among the biggest earners in 2022.
Despite the tough market environment, the list, which is composed of the highest-earning managers, found that the top 25 hedge funds made a combined $21.5 billion in earnings last year.
Other renowned investors followed by GuruFocus that made the top 10 were Jim Simons (Trades, Portfolio), the head of Renaissance Technologies, and Ray Dalio (Trades, Portfolio)’s Bridgewater Associates.
Cohen raked in $1.9 billion in 2022, pulling him into third place, while Tepper was fourth with $1.2 billion. As a result of their strong performance, investors may be interested in knowing where the two gurus are investing. Last year, Cohen was seventh and Tepper was sixth.
Cohen’s Stamford, Connecticut-based firm executes a long-short strategy that involves fundamental, bottom-up research processes, macro investments and insights to generate superior risk-adjusted returns. He has owned the New York Mets baseball team since September of 2020.
In contrast, Tepper specializes in distressed debt. After becoming the owner of the Carolina Panthers pro football team, he announced in 2019 that he would be returning money to investors and converting his New Jersey-based hedge fund into a family office. As such, he mostly manages his own assets.
While Cohen and Tepper have slightly different approaches to investing, they have a number of holdings in common. According to the GuruFocus Aggregated Portfolio, a Premium feature based on 13F filings as of Dec. 31, the two gurus both had positions in Caesars Entertainment Inc. (CZR, Financial), Uber Technologies Inc. (UBER, Financial), Amazon.com Inc. (AMZN, Financial) and Salesforce Inc. (CRM, Financial), among several other stocks.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Caesars Entertainment
During the quarter, both gurus entered new positions in Caesars Entertainment (CZR, Financial) after previously selling out. Cohen invested in 266,894 shares, while Tepper picked up 425,000 shares. The gurus have a combined equity portfolio weight of 1.35% in the stock.
The Reno, Nevada-based company, which owns and operates hotels and casinos, has an $11.43 billion market cap; its shares were trading around $53.10 on Tuesday with a price-book ratio of 3.07 and a price-sales ratio of 1.06.
The GF Value Line suggests the stock, while undervalued, is a possible value trap currently based on its historical ratios, past financial performance and analysts’ future earnings estimates. As such, potential investors should do thorough research before making a decision.
At 89 out of 100, however, the GF Score indicates the company has good outperformance potential, driven by high ratings for profitability, growth, GF Value and momentum as well as a low financial strength rank.
According to GuruFocus, Cohen has gained roughly 6.55% on his investment so far, while Cohen has recorded a -13.63% return.
Of the gurus invested in the stock, Simons’ firm has the largest stake with 0.49% of its outstanding shares. Mario Gabelli (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Jefferies Group (Trades, Portfolio) also have positions in Caesars Entertainment.
Uber Technologies
During the fourth quarter, Tepper increased his Uber (UBER, Financial) stake by 22.5% to 1.22 million shares, while Cohen upped his investment by 18,546.70% to 9.8 million shares. They have a combined equity portfolio weight of 3.09% in the stock.
The ridesharing company headquartered in San Francisco, which also offers food and package delivery services, has a market cap of $68.18 billion; its shares were trading around $33.92 on Tuesday with a price-book ratio of 9.27 and a price-sales ratio of 2.10.
According to the GF Value Line, the stock, while undervalued, is a possible value trap currently. As such, potential investors should cautiously investigate the company before reaching a decision.
Further, the GF Score of 70 implies the company has poor performance potential on the back of a low profitability rank and moderate growth, financial strength and GF Value ratings. Momentum was high, however.
GuruFocus estimates Cohen has lost 8.03% on his investment since the fourth quarter of 2020, while Tepper has lost roughly 17.22% since the second quarter of 2021.
With a 1.01% stake, Ken Fisher (Trades, Portfolio) is Uber’s largest guru shareholder. Other top guru investors include Frank Sands (Trades, Portfolio), the late Spiros Segalas’ Harbor Capital Appreciation Fund (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Bill Nygren (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Larry Robbins (Trades, Portfolio).
Amazon
Cohen upped his Amazon (AMZN, Financial) position by 174.76% during the quarter to 5.05 million shares, while Tepper boosted his holding 3.45% to 1.5 million shares. They have a combined equity portfolio weight of 10.82% in the stock.
The Seattle-based e-commerce company has a $958.74 billion market cap; its shares were trading around $93.56 on Tuesday with a price-book ratio of 6.56 and a price-sales ratio of 1.87.
Based on the GF Value Line, the stock, while undervalued, appears to be a value trap currently due to the weakness in the tech sector over the past year. Investors may, therefore, want to tread carefully before coming to a decision.
Regardless, the GF Score of 86 means it has good outperformance potential going forward. While it received high ratings for growth and profitability, the other three criteria recorded more moderate ranks.
GuruFocus says Cohen has gained around 20.37% on his investment since the first quarter of 2017, while Tepper has accrued a return of 36.23% since the first quarter of 2019.
Fisher has the largest stake in Amazon with 0.50% of its outstanding shares. The stock is also being held by Baillie Gifford (Trades, Portfolio), Sands, Dodge & Cox, Halvorsen, Segalas’ fund, Al Gore (Trades, Portfolio)’s Generation Investment, Simons’ firm and Warren Buffett (Trades, Portfolio), among others.
Salesforce
Cohen entered a 3.34 million-share stake in Salesforce (CRM, Financial) position during the fourth, while Tepper increased his holding by 57.89% to 300,000 shares. The stock has a combined weight of 4.48% in their equity portfolios.
The tech company headquartered in San Francisco, which provides customer relationship management software and applications that are focused on sales, customer service and analytics, has a market cap of $184.04 billion; its shares were trading around $184.04 on Tuesday with a price-earnings ratio of 876.38, a price-book ratio of 3.15 and a price-sales ratio of 5.84.
The GF Value Line suggests the stock is significantly undervalued.
Accordingto the GF Score of 91, the company has high outperformance potential. While it received solid ranks for four of the criteria, the financial strength rating was more moderate.
GuruFocus data shows Cohen has gained an estimated 17.30% on his investment so far. Meanwhile, Tepper has recorded a 24.10% gain.
Holding a 1.39% stake, Fisher is Salesforce’s largest guru shareholder. Other gurus invested in the stock include Segalas’ fund, Baillie Gifford (Trades, Portfolio), Gore’s firm, Nygren, First Eagle Investment (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).
Additional common holdings and portfolio composition
Other stocks Cohen and Tepper both owned as of Dec. 31 included UnitedHealth Group Inc. (UNH, Financial), Aptiv PLC (APTV, Financial), Microsoft Corp. (MSFT, Financial), The Walt Disney Co. (DIS, Financial), Antero Resources Corp. (AR, Financial), Macy’s Inc. (M, Financial), Sysco Corp. (SYY, Financial), Alibaba Group Holding Ltd. (BABA, Financial) and Meta Platforms Inc. (META, Financial)
Cohen’s $28.95 billion equity portfolio, which was composed of 1,423 stocks as of the end of the fourth quarter, was largely invested in the health care and technology sectors.
Over half of Tepper’s $1.35 billion equity portfolio, which was composed of 24 stocks for the same period, was invested in the energy, consumer cyclical and communication services sectors.
