Point72 Asset Management Stocks Trading Far Below Intrinsic Value

in INVESTING IDEAS by

Owens-Illinois, Inc. (NYSE: OI) and Lam Research Corporation (NASDAQ: LRCX) are among the top stocks that Steven Cohen owns which appear to have the most upside potential based on underlying fundamentals. Value investors may want to take a closer look at the names below.


Point72 Asset Management’s Most Undervalued Holdings

To determine which stocks are trading below their intrinsic value, aka “fair value” I used the finbox.io Fair Value estimates. I also wanted to blend in some indication of which stocks might be ready to make a move up soon because they’re popular with Wall Street analysts.

I calculated an average using the finbox.io fair value upside and analyst upside to create a blended upside which I then used to rank the most undervalued holdings.

Here are the top 7 stocks based on my calculations:

Point72 Asset Management Most Undervalued Holdings
Ticker Name Upside (finbox.io) Upside (Analyst Target) Blend Upside
OI OWENS ILL INC 67.0% 49.0% 58.0%
LRCX LAM RESEARCH CORP 37.5% 52.3% 44.9%
THO THOR INDS INC 35.4% 40.1% 37.8%
RDUS RADIUS HEALTH INC 14.1% 57.2% 35.6%
PTEN PATTERSON UTI ENERGY INC 29.5% 41.4% 35.4%
BERY BERRY GLOBAL GROUP INC 26.4% 44.2% 35.3%
USCR U S CONCRETE INC 27.5% 41.3% 34.4%

Owens-Illinois, Inc. (NYSE: OI) appears to be the most undervalued stock in the fund. The company has a blended upside of 58.0% relative to its current trading price. Value investors may want to take a deeper dive into the valuation of the company.

Lam Research Corporation (NASDAQ: LRCX) appears to be the second most undervalued stock in the portfolio. The company’s blended upside of 44.9% is very intriguing. With 37.8% margin of safety, Thor Industries, Inc. (NYSE: THO) is the third most attractively priced security.

Other notable holdings with nice upside potential includes Radius Health, Inc. (NASDAQ: RDUS), Patterson-UTI Energy, Inc. (NASDAQ: PTEN), Berry Plastics Group, Inc. (NYSE: BERY) and U S Concrete, Inc. (NASDAQ: USCR).


Why Follow Steven Cohen’s Portfolio?

If you haven’t heard of Billionaire Steven Cohen, you may already know a little about him if you’ve watched Showtime’s hit series Billions. Damian Lewis plays the show’s main character Bobby Axelrod that very loosely portrays Cohen and his former hedge fund SAC Capital.

The show focuses on a district attorney (played by Paul Giamatti) whose sole focus is to take down Axelrod on securities fraud. Cohen’s hedge fund, SAC Capital, was similarly charged with insider trading in 2013 and ultimately settled out of court for $1.8 billion in the largest securities fraud case ever. The Showtime series is very entertaining, albeit pure entertainment, and not entirely an accurate representation of Cohen.

Investing morality aside, Cohen’s real-life results are undeniable. He was the third highest-earning hedge fund manager of 2012 when he made $1.4 billion.

Steven Cohen has generally shied away from the press even before the SEC’s investigation making it difficult to truly understand his investment approach. However, Jack Schwager shared a rare look into Cohen’s process in 2003 when he published Stock Market Wizards: Interviews with America’s Top Stock Traders. Leading up to the interview with Cohen, Schwager highlighted that “in the seven years he has managed money, Cohen has averaged a compounded annual return of 45 percent.”

The ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed above at the Point72 Asset Management page.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Expertise: Valuation, financial statement analysis. Matt Hogan is also a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock. His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com. Matt can be reached at matt@finbox.io or at +1 (516) 778-6257.

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