Steve Cohen’s Point72 dumps these AI stocks

Legendary hedge fund pioneer Steven Cohen is best known for founding SAC Capital Advisors, one of the most successful hedge funds ever created. However, it was forced to close in 2013 after the firm pleaded guilty to securities fraud involving allegations of insider trading. Cohen ended up paying $1.8 billion in penalties.

Point72 Asset Management it was founded in his wake as a family office that invests on behalf of Cohen, his relatives and friends. It has more than $35 billion in assets under management (AUM).

However, in a surprise announcement, Cohen just said he will quit trading at the hedge fund. Conformable ReutersA spokeswoman for Point72 said: “He is taking a break from trading his own book and feels he can have a greater impact by focusing on leading the company, leading strategic initiatives and mentoring and coaching the next generation of talent.”

This makes it instructive to see the deals and prices in Cohen’s portfolio. Below are the two stocks that saw the most share sales in the hedge fund’s portfolio.

Key points about this article:

• Steve Cohen had an illustrious career on Wall Street that was upended when SAC Capital was accused of insider trading and fined nearly $2 billion.
• The hedge fund operator had to shut down his fund, but came back with the creation Point72 Asset Managementa family office fund that manages Cohen’s personal money as well as for certain wealthy individuals.
• If you are looking for action with huge potential, be sure to grab a free copy of ours brand new “Next NVIDIA” report.. It has a software stock where we are sure it has 10x potential.

Broadcom (AVGO)

Broadcom sign in front of company building

Easy come easy go. Such is the case with Cohen’s position in mobile chip manufacturing Broadcom (NASDAQ:AVGO). The hedge fund operator went from having virtually no skin in the chip stock game to amassing a position of 4.7 million shares worth $632 million in a single quarter. Now it’s back to basically nothing a quarter later.

Well, nothing. Cohen still owns 1.5 million shares valued at $246 million, but that represents a 67% drop in his position. It went from the second-largest position to the eighth-largest, but since Cohen owns more than 1,100 shares, it’s still pretty big. But it’s still a pretty curious investment decision.

Broadcom is fast becoming a major must own artificial intelligence stock. While industry peers Nvidia (NASDAQ:NVDA) continues to soak up the oxygen in the room when it comes to discussing chipmakers and AI, Broadcom’s data center infrastructure business could replace simple chips as a critical growth component.

AI has been the driving force behind the growing industry demand for Broadcom networking solutions, Ethernet switches and silicon routing solutions. Its custom AI chips are expected to bring in $11 billion in sales this year, or 25% of total salescompared to 15% a year ago.

The chipmaker’s custom AI accelerators and network chips for merchants contributed to a 35% increase in AI chip sales last quarter.

Cohen appears to be leaving a lot of money on the table, as AVGO shares are up 50% in 2024 and have doubled in the past year. The stock is up 4% since the end of the second quarter.

ASML Holding (ASML)

Semiconductor manufacturing in progress

Semiconductor equipment manufacturer from the Netherlands ASML Holdings (NASDAQ:ASML) has been caught up in the sell-off in the tech sector that began in July. Its shares have lost a quarter of their value in the past two months, having more than doubled since the sector’s rally began in late 2022. Cohen appears to have exited just before the carnage began.

His hedge fund Point72 unloaded almost half of its stake in ASML in the second quarter. His portfolio accumulated a 258,000-share position in the equipment maker, which would have been worth $145 million at the peak, but he sold nearly 116,000 shares, or 44% of the total. That suggests it saved about $16 million in profits from evaporation.

However, ASML is also a stock with a long runway. It has a monopoly on critical equipment that chipmakers need to produce AI chips. Its extreme ultraviolet (EUV) lithography machines are needed by the semiconductor industry to clean wafers to pristine condition before production begins. As demand for AI chips accelerates, they should be able to continue to expand.

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