Steve Cohen's Investment Moves: Selling Broadcom and Investing in Apple

Steve Cohen, known for owning the New York Mets, is also the head of Point72 Asset Management, a large hedge fund.

With a net worth exceeding $21 billion, Cohen is recognized as an experienced investor. He established S.A.C Capital Advisers in 1992, later transitioning to Point72 Asset Management in 2014 following insider trading charges against S.A.C. He currently holds the position of co-chief investment officer at Point72.

While investors should approach large institutional investors like Cohen with caution, observing their moves can offer valuable insights into potential investment opportunities.

Recently, Cohen reduced his investment in the semiconductor company Broadcom (AVGO) by selling more than 3 million shares, which constitutes 67.5% of Point72's holdings in the company. Point72 began acquiring shares of Broadcom in 2018, and the stock has seen a solid performance during that time, including a rise of about 50% this year and a recent 10-for-1 stock split in June designed to attract smaller investors.

Broadcom’s performance has benefited from the growing excitement around artificial intelligence this year; however, with the stock trading at nearly 140 times trailing earnings, it appears Cohen may have opted to realize some profits. Additionally, insider selling by Broadcom executives and analysts predicting a modest upside could have influenced this decision.

New Stake in a Buffett Favorite

In the same quarter, Cohen also made headlines by purchasing 1.57 million shares of Apple (AAPL) at approximately $186.50 per share, making it the third-largest holding in Point72's portfolio. Although Cohen has invested in Apple before, this transaction marks a new entry into the stock.

Apple is notably the top holding in Berkshire Hathaway's portfolio. Interestingly, Berkshire sold about 70% of its Apple shares this year, yet Apple still comprises over 20% of their $312 billion equity portfolio.

The decision to invest in Apple aligns with Point72’s historical relationship with the tech giant. Apple’s forward price-to-earnings ratio currently stands at 30.3, down from its previous highs. The company recently reported fiscal fourth-quarter earnings that surpassed estimates, with a 6% growth in iPhone revenue, indicating a positive consumer reaction to the new iPhone 16 launched in late September.

Moreover, Apple has introduced Apple Intelligence, an AI system for its iPhones and Macs with the iOS 18.1 operating system. Many anticipate that these AI advancements could revitalize iPhone demand, particularly in light of recent declines attributed to weaker consumer interest in China.

Cohen seems optimistic about the new AI features being integrated into Apple’s products, viewing the stock's valuation as favorable. Furthermore, Apple is known for its strong cash flow generation and share repurchase programs, which would likely appeal to investors like Cohen.

Cohen, Broadcom, Apple