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Wednesday, November 30, 2022

How does Mets owner Steve Cohen play a ‘role of defense’ during a stock market downturn?

Mets owner Steve Cohen has adopted a defensive stock-picking strategy, plowing into safe havens, including oil and casino properties, as he seeks to hedge against a bearish market, according to a report.

The 65-year-old hedge-fund magnate, who has an estimated net worth of $11.9 billion, has recently been focusing on so-called high-yield stocks, which are equities whose dividend yields exceed the yield of any benchmark average, such as US Treasury 10-year note.

Such stocks tend to outperform low-yield and no-yield securities during bear markets because investors view them as less risky.

On the face of it, this looks like a departure for Cohen, who as head of Point 72 Asset Management earned a reputation for making big, risky bets on volatile stocks.

During the first quarter of this year, Cohen’s fund bought 633,800 shares of VICI Properties, a New York-based real estate investment trust, or REIT, that specializes in casinos, hotels and racetracks, according to a securities filing.

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Cohen Is The Owner Of Point72 Asset Management Hedge Fund.
Cohen is the owner of Point72 Asset Management Hedge Fund.
AP. Via Sipa USA

VICI was created in 2017 as part of a spin-off of Caesars Entertainment after the company went bankrupt for $18 billion. VICI has 10 resorts on the Las Vegas Strip, including 1.2 million square feet of casino space, more than 40,000 hotel rooms, and 6 million square feet of convention space.

In all, VICI’s portfolio includes 43 casinos; 450 restaurants, bars and clubs; and four major golf courses. In April, VICI announced that it had completed its $17.2 billion acquisition of MGM Growth Properties.

Shares of VICI Properties were up nearly 2% as of 3 pm on Thursday. At about $30 per share, Cohen’s stake in VICI is worth about $18 million, according to finance site TipRanks.

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Cohen Has Increased His Investments In High-Yield Dividend Stocks.
Cohen has increased his investments in high-yield dividend stocks.
AFP via Getty Images

Cohen is also betting on BP, the world’s largest oil and gas producer, whose market capitalization is estimated at $104 billion.

The Mets boss bought an additional 3,276,969 shares of BP. Cohen had already bought half a million shares of the company before his latest investment – valuing his stake in the company to about $122 million.

BP shares rose nearly 1% on Wednesday. As of 3 pm on Wednesday, BP stock was trading at around $32.40 per share.

Like most energy companies, BP made impressive profits despite divesting from a 20% stake in Russian firm Rosneft in the wake of President Vladimir Putin’s invasion of Ukraine.

In the first quarter of this year, BP reported a net profit of more than $6 billion — easily beating analyst estimates of $4.1 billion.

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