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SAC Capital was founded in 1992 by the eminent Steven Cohen. Cohen has since grown the fund into one of the largest in the world, making himself one of the world’s richest men, and with good reason.

Cohen’s SAC Capital has an average annual return of 30%, thanks largely to Cohen’s quantitative approach to his investment strategy. Unfortunately, in the current volatile market, Cohen has not fared so well. Since the end of last quarter, Cohen’s top 25 stock picks (excluding his put positions on the SPY) have lost 11.3%. While this is better than many other hedge funds have done, the S&P 500 (NYSEARCA:SPY) is performing moderately better, touting a return since June of -10.6%, or 70 basis points better than Cohen. Cohen’s actual performance is naturally better than the market because of all the hedging he has done. The SPY put positions is one of these hedges.

Company

Ticker

Value (x1000)

Activity

Return Since June

SPDR GOLD TRUST Calls

GLD

627714

New

26%

SPDR S & P 500 ETF Puts

SPY

521282

-36%

-11%

DENDREON CORP

DNDN

351830

5%

-72%

POWERSHARES QQQ Calls

QQQ

285250

New

-7%

SPDR S & P 500 ETF Calls

SPY

211812

3110%

-11%

APPLE INC

AAPL

200746

136%

11%

PLAINS EXPLORATION & PROD

PXP

189987

0%

-26%

SUNCOR ENERGY INC NEW

SU

189975

953%

-22%

WEATHERFORD INTL Calls

WFT

177998

New

-13%

WEATHERFORD INTL

WFT

175630

4426%

-13%

E N S C O PLC

ESV

159976

109%

-12%

E M C CORP MA

EMC

155962

0%

-22%

INGERSOLL RAND PLC

IR

148701

1212%

-29%

EXPRESS SCRIPTS INC

ESRX

145723

-15%

-16%

LIBERTY MEDIA CORP NEW

LINTA

144068

1000%

-7%

SHERWIN WILLIAMS CO

SHW

141900

69%

-13%

VALERO ENERGY CORP NEW

VLO

139975

99%

-14%

HARLEY DAVIDSON INC

HOG

137967

79%

-12%

TYCO INTERNATIONAL

TYC

136307

1417%

-19%

YUM BRANDS INC

YUM

125907

4708%

-4%

UNITED THERAPEUTICS CORP

UTHR

120351

342%

-24%

MACYS INC

M

119693

329%

-13%

NEWMONT MINING CORP

NEM

117720

-53%

19%

COINSTAR INC

CSTR

112242

51%

-17%

AMAZON COM INC

AMZN

111347

447%

3%

Cohen has had a few gains this quarter. His position in SPDR Gold Trust (NYSEARCA:GLD), which is also his largest position, has gained 23% so far. John Paulson of the hedge fund Paulson & Co is also a fan of the commodity . Cohen also gained big in Apple Inc (NASDAQ:AAPL), earning 16% on his position in the electronics and media company. Apple is his 6th largest position and the most popular stock amongst hedge funds (see the list of the most popular stocks here).

Cohen’s other outperforming stock picks were Liberty Media (LINTA), Yum Brands (NYSE:YUM), Newmont Mining (NYSE:NEM), and Amazon (NASDAQ:AMZN). Considering YUM and AMZN are cyclical stocks with high momentum, it is interesting to see these stocks outperform the market.

While Cohen’s performance so far this quarter has been less than stellar, most of that is attributable to the sharp decline of Dendreon Corp (NASDAQ:DNDN), Cohen’s 3rd largest position. Dendreon is the company that makes the prostate drug Provenge. After they announced poor sales, the company’s value plummeted. So far, the stock is down 72%, translating to more than $200 million loss for SAC Capital (read the whole story here).

Excluding Dendreon from Cohen’s top 25 stocks would result in a -7% return since the end of June, which is a few percentage points better than SPY. Cohen’s other big losses were IR, PXP, SU, and UTHR.

We like Cohen, but given his recent downturn it is easy to wonder whether the critics were right; maybe he really has lost his mojo. Cohen’s past performance may be legendary but, for an individual investor looking to mirror someone, reputation doesn’t count half as much as results and lately Cohen is not delivering. While it is true that Dendreon could have been a fluke, and Cohen could recover (and likely will), mirroring his entire portfolio now is not advisable. Nevertheless we believe investors may be able to outperform the market over the long-term by imitating his top stock picks. His top two positions were extremely profitable.

Disclosure: I am long SPY.

Additional disclosure: I am long physical gold.

Source: SAC Capital's Top Stock Picks