Market Overview

Invest Like Steve Cohen...Using ETFs


Investors looking to pull off their best impression of SAC Capital honcho Steve Cohen have a few options. Among them: Come up with the coin to invest in SAC and have Cohen and his crew manager you money. However, the minimum investment, whatever it is, is probably off limits to more than 90% of investors.

Or you could invest in high-end art. After all, Cohen's art collection is not only valuable, but envied in the art world. Again, this is costly and art isn't exactly a liquid asset class.

Let's make life easy and take a look at some of the ETFs we know SAC Capital is bullish on or that could help investors access stocks the firm is long right now.

SPDR Gold Shares (NYSE: GLD): Some hedge fund legends, namely John Paulson, have been trimming their exposure to the largest physical gold ETF. Not Cohen. SAC Capital added about 184,600 GLD shares in Q3 recent 13F filing data show and back in August, Bloomberg reported SAC held hundreds of millions in GLD call options.

Consumer Discretionary Select Sector SPDR (NYSE: XLY): Some investors are starting to bet on the U.S. consumer. Count Cohen among them. SAC initiated a new position in XLY in Q3 to the tune of almost 450,000 shares. XLY is home to noteworthy discretionary names such as Amazon (Nasdaq: AMZN), McDonald's (NYSE: MCD), Tiffany (NYSE: TIF) and Walt Disney (NYSE: DIS), just to name a few.

iShares FTSE Xinhau China 25 Index Fund (NYSE: FXI): As we've noted here, the largest China-specific ETF isn't always the best China-specific ETF, but FXI is the one that SAC Capital likes. The hedge fund bought 215,000 shares of FXI during Q3 and looking at the chart, it's safe to say this trade has been a winner for Cohen thus far.

SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP): To be perfectly clear, the most recent 13F data does NOT indicate that SAC Capital has a position in XOP. That said, five of the energy stocks the hedge fund is long are featured in this ETF.

iShares Dow Jones US Oil Equipment Index Fund (NYSE: IEZ): Again, to our knowledge, SAC does NOT have a position in this ETF. However, the 13F's show the firm is long Baker Hughes (NYSE: BHI), Cameron International (NYSE: CAM) and Weatherford (NYSE: WFT). That's more than 15% of IEZ's weight right there.

Bull case: Cohen is one of the most successful traders in Wall Street history. Period. In the case of gold, there's a long-term uptrend at play. With the other ETFs, the global economy needs to rebound and thrive, encouraging consumers to spend money and for companies to not be shy about spending on energy.

Bear case: Europe could suppress FXI, XOP, XLY and IEZ.

Posted-In: Long Ideas News Sector ETFs Short Ideas Emerging Market ETFs Hedge Funds Commodities Movers & Shakers Best of Benzinga


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