Grand $lam for Cohen investors
New York Mets owner Steve Cohen’s Point72 hedge fund generated more than $2.4 billion in profits for investors last year.
Point72, headquartered in Stamford, Conn., posted a 10.3% net gain in 2022 despite economic headwinds, according to data from LCH Investments, which was cited by Financial Times.
Cohen, whose net worth has been valued by Bloomberg at nearly $13 billion, pocketed $1.7 billion in personal capital gains from his fund, according to Institutional Investor. His firm makes its money through what is known as a long-short equity strategy. Point72 takes a long position on underpriced stocks while selling short positions on securities that are overvalued.
According to Institutional Investor, Point72 made most of its money by betting against equities and betting that interest rates would rise. The Federal Reserve has been aggressive in hiking interest rates as part of a strategy to tame record levels of inflation.
Cohen’s windfall should be reassuring to Mets fans who have been ecstatic with his aggressive signing of high-priced free agents.
The Mets added Cy Young Award winner Justin Verlander and Japanese pitcher Kodai Senga as free agents.
Cohen, who bought the Mets from the Wilpon family for $2.4 billion in 2021, nearly snagged star shortstop Carlos Correa, but questions about the slugger’s ankle injury raised doubts among Mets management that he was worth the 12-year, $315 million investment.
Correa ended up returning to the Minnesota Twins.
Point72 was indirectly victimized by the “meme stock” craze which put a squeeze on short-sellers such as Melvin Capital, a hedge fund that counted Cohen’s firm as one of its investors.
Melvin Capital lost $6.8 billion — more than half of its assets under management — in January 2021, when retail investors banded together on Reddit and bought shares of distressed stocks such as AMC and GameStop — artificially inflating the share prices.