Summary
- The gurus were among the top 10 hedge funds that made the most money.
Earlier this month, the 21st 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 2021. The gurus tied for fifth place last year.
The list, which is composed of the highest-earning managers, found that the top 25 hedge funds made a combined $26.64 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, Citadel’s Kenneth Griffin, Third Point leader Daniel Loeb (Trades, Portfolio) and Ray Dalio (Trades, Portfolio), the founder of Bridgewater Associates.
Breaking their streak of ties for the past several years, Tepper raked in $1.6 billion in 2021, pulling him into sixth place, while Cohen was seventh with $1.4 billion. As a result of their strong performance, investors may be interested in knowing where the two gurus are finding value opportunities.
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.
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, the two gurus both had positions in Meta Platforms Inc. (FB, Financial), Amazon.com Inc. (AMZN, Financial), Micron Technology Inc. (MU, Financial), Macy’s Inc. (M, Financial) and Occidental Petroleum Corp. (OXY, Financial), among several other stocks, as of the end of fourth-quarter 2021.
Meta Platforms
Tepper trimmed his Meta Platforms (FB, Financial) stake by 3.72% in the fourth quarter, while Cohen curbed his position by 31.58%. The gurus have a combined equity portfolio weight of 10.33% in the stock.
Formerly known as Facebook, the Menlo Park, California-based social media company has a $554.35 billion market cap; its shares were trading around $203.66 on Thursday with a price-earnings ratio of 14.86, a price-book ratio of 4.49 and a price-sales ratio of 4.95.
The GF Value Line currently suggests the stock is significantly undervalued based on its historical ratios, past financial performance and future earnings projections.
The GF Value Line suggests the stock is significantly undervalued currently.
According to GuruFocus, Cohen has gained roughly 12% on his investment since the second quarter of 2020. GuruFocus data shows Tepper’s investment has climbed 18.58% since the third quarter of 2016.
Of the gurus invested in Meta Platforms, Ken Fisher (Trades, Portfolio) has the largest stake with 0.34% of its outstanding shares. Baillie Gifford (Trades, Portfolio), Dodge & Cox, Frank Sands (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Chris Davis (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Philippe Laffont (Trades, Portfolio) and many other gurus also own the stock.
Amazon
In the fourth quarter, Cohen upped his Amazon (AMZN, Financial) holding by 2,446.37%, while Tepper left his position unchanged. They have a combined equity portfolio weight of 7.71% in the stock.
The e-commerce company, which is headquartered in Seattle, has a market cap of $1.56 trillion; its shares were trading around $3,062.83 on Thursday with a price-earnings ratio of 47.53, a price-book ratio of 11.35 and a price-sales ratio of 3.38.
According to the GF Value Line, the stock is modestly undervalued currently.
The GF Value Line suggests the stock is modestly undervalued currently.
GuruFocus estimates Cohen has gained 28.11% on his investment since the first quarter of 2017, while Tepper has accrued a return of 52.77% since the first quarter of 2019.
Fisher has the largest stake in Amazon with 0.43% of its outstanding shares. Other top guru investors include Baillie Gifford (Trades, Portfolio), Sands, Segalas, Steve Mandel (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Al Gore (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Coleman and Andreas Halvorsen (Trades, Portfolio).
Micron Technology
After selling out of Micron Technology (MU, Financial) in the third quarter, Cohen entered a new stake in the fourth quarter. Tepper left his position unchanged. The gurus have a combined portfolio weight of 7.42% in the stock.
The Boise, Idaho-based chipmaker has an $87.09 billion market cap; its shares were trading around $78.22 on Thursday with a price-earnings ratio of 12.07, a price-book ratio of 1.91 and a price-sales ratio of 3.
Based on the GF Value Line, the stock appears to be fairly valued currently.
The GF Value Line suggests the stock is fairly valued.
GuruFocus data shows Cohen has gained an estimated 24.62% on his investment so far. Tepper’s investment has returned roughly 12.9% since the fourth quarter of 2016.
With a 3.68% stake, Primecap is the company’s largest guru shareholder. Li Lu (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Simons’ Renaissance Technologies, Seth Klarman (Trades, Portfolio), Mohnish Pabrai (Trades, Portfolio) and the Parnassus Endeavor Fund (Trades, Portfolio) also have sizable investments in Micron.
Macy’s
During the fourth quarter, Cohen increased his Macy’s (M, Financial) position by 64.41%, while Tepper upped his stake by 44.23%. They have a combined equity portfolio weight of 6.92% in the stock.
The iconic department store chain headquartered in New York has a market cap of $7.96 billion; its shares were trading around $27.03 on Thursday with a price-earnings ratio of 5.73, a price-book ratio of 2.13 and a price-sales ratio of 0.33.
The GF Value Line suggests the stock is significantly overvalued currently.
The GF Value Line suggests the stock is significantly overvalued.
Since establishing it in second-quarter 2021, GuruFocus estimates Cohen has gained 8.82% on the investment. Tepper has gained approximately 42.28% since the fourth quarter of 2020.
Of the gurus invested in the stock, Tepper has the largest stake with 3.37% of its outstanding shares. Macy’s is also being held by Yacktman Asset Management (Trades, Portfolio), Simons’ firm, Jana Partners (Trades, Portfolio), John Hussman (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio).
Occidental Petroleum
Cohen added to his Occidental Petroleum (OXY, Financial) holding by 1,060.96 during the fourth quarter, while Tepper trimmed his stake by 0.6%. The stock has a combined weight of 4.98% in their equity portfolios.
The Houston-based oil and gas producer has a $54.06 billion market cap; its shares were trading around $57.49 on Thursday with a price-earnings ratio of 37.07, a price-book ratio of 5.08 and a price-sales ratio of 2.09.
According to the GF Value Line, the stock is significantly overvalued currently.
The GF Value Line suggests the stock is significantly overvalued.
GuruFocus data indicates Cohen has gained an estimated 0.84% on his investment since the first quarter of 2021. Since fourth-quarter 2020, Tepper has seen a 214.59% gain.
Buffett is the company’s largest guru shareholder with 12.66% of its outstanding shares. Other gurus with large investments in Occidental are Dodge & Cox, Carl Icahn (Trades, Portfolio), Simons’ firm, John Paulson (Trades, Portfolio), the Smead Value Fund (Trades, Portfolio) and the T Rowe Price Equity Income Fund (Trades, Portfolio).
Additional common holdings and portfolio composition
Other stocks Cohen and Tepper both owned as of Dec. 31, 2021 included T-Mobile US Inc. (TMUS, Financial), PG&E Corp. (PCG, Financial), General Motors Co. (GM, Financial), The Energy Select Sector SPDR Fund (XLE, Financial) and Microsoft Corp. (MSFT, Financial).
Cohen’s $24.82 billion equity portfolio, which was composed of 1,044 stocks as of the end of the fourth quarter, was largely invested in the health care and technology sectors.
Overview of Cohen’s equity portfolio by sector.
Over half of Tepper’s $3.89 billion equity portfolio, which was composed of 44 stocks for the same period, was invested in the communication services and consumer cyclical sectors.
Overview of Tepper’s equity portfolio by sector.
Disclosures
I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com.
Source: https://www.forbes.com/sites/gurufocus/2022/03/18/5-stocks-top-earners-steven-cohen-and-david-tepper-agree-on/