Steve Cohen’s latest trade is going to the dogs.
No, we’re not referring to the New York Mets owner’s difficult baseball season, but rather to the fact that Cohen’s Point72 Asset Management hedge fund has made a big bet on Chewy, the online seller of pet food and other related products.
According to a recently filed 13G, which suggests that the investment is passive, Point72 has more than tripled its stake in the company to more than 6.7 million shares, making the huge multistrategy firm Chewy’s sixth-largest shareholder, with 5.8 percent of the total shares. Chewy is also now Point72’s fourteenth-largest U.S. listed common stock long, in a portfolio of literally more than a thousand issues.
It’s not clear why Point72 was drawn to Chewy. In recent weeks, the firm made several large purchases of biopharma stocks that triggered 13G filings, but these were small-cap companies and hardly registered a blip on the Point72 stock-holding list.
Chewy shares closed Friday at $35.32, down nearly 30 percent from the stock’s February high and down more than two-thirds from its February 2021 high. Wall Street’s sell-side community is generally not enthusiastic about the stock, which could be one good reason to own it now. According to Benzinga.com, 14 analysts have an average 12-month price target of $43.64, in a range of $26 to $56.
In early June, UBS raised its target to $26 from $24 but maintained its sell recommendation. On the other hand, Barron’s recently reported that Goldman Sachs had raised its rating on Chewy’s stock to buy from neutral and had boosted the price target on the stock from $42 to $50. Goldman also raised its estimates for revenue and cash flow, citing a return to stable growth in the customer base, an uptick in higher-spending consumers, and strategic initiatives that include international expansion, among other factors.
Last week, Chewy announced that chief financial officer Mario Marte would be retiring. The company has named chief accounting officer Stacy Bowman as interim CFO.
Point72 is a multistrategy firm. It keeps a very low profile, with its quarterly 13F U.S. stock filings the only public insight into its investments or its portfolio.
Point72’s largest strategy, by both assets and head count, is its discretionary long-short strategy. Others include a system that engages in computerized trading in many liquid markets called Cubist Systematic Strategies, a global macro business that makes discretionary investments, and a private investing business that invests in venture capital.
Point72 was up more than 10 percent in 2022, a year in which the stock market suffered double-digit losses, especially in tech stocks. In the first half of 2023, the firm was up a little more than 6 percent, falling slightly behind Citadel’s Wellington fund, according to a person who has seen the results.
At the end of the first quarter, two consumer-oriented stocks ranked among Point72’s largest U.S. common stock holdings: retailer Walmart and fast-food giant McDonald’s.
Aside from those two companies, several familiar tech and internet stocks dominated Point72’s top holdings, including No. 1 common stock long Meta Platforms, chipmaker and second-largest long Broadcom, No. 3 Amazon, and No. 6 Alphabet.
