New York Mets owner and CEO Point72 Steven A. Cohen, 67, recently disclosed that he is bullish on AI's long-term prospects and described it as a "really durable theme" for investing.
According to sources, he plans to launch a separate, AI-focused hedge fund that trades AI hardware and semiconductor firms worldwide.
The asset management firm is seeking to raise $1 billion for the hedge fund, some of which will come from Cohen himself and the firm's employees and the rest from external investors, the people added. They highlighted that Point72 will launch the new long/short equity fund later this year or early 2025, run by portfolio manager Eric Sanchez.
This separate entity will be Point72's first new hedge fund in a long time. The asset management firm currently has a main hedge fund, which is strictly market-neutral, alongside several venture capital entities. Interestingly, the new public equity offering will stay separate from the central fund due to the need for a more flexible mandate.
The "magnificent seven" stocks, led by Nvidia, have boosted the overall stock market to new record levels in 2024. The unstoppable rally of tech and hardware stocks leveraging AI systems and machine learning is translating to increased enthusiasm in the sector.
"I don't see it as a bubble. I think the markets are discounting some of what we ... think AI is going to do for companies," Cohen said in a CNBC interview. He pointed out how AI can significantly bump productivity in companies across industries, adding that his firm figured out a way to save $25 million with the help of large language models like ChatGPT.
He sees AI's impact as "transformational" and that it can help companies overhaul their operations for efficiency, saving them tons of money.
"There's going to be big winners and big losers," he said during the interview in April, adding that while it may take years to play out, "when you have technological change like this, it sort of reminds me of the '90s where the best new companies came out of that period."
A couple of years back, Point72 inaugurated its first private equity fund, Hyperscale, which uses AI to enhance efficiency in companies it acquires. The firm also founded Point72 Ventures in 2016, which invests Cohen's funds in emerging tech firms.
How Did Steve Cohen Make His Fortune?
Cohen is known for his high-frequency trades and willingness to take risks in volatile markets for high returns. His contrarian approach to investing and capitalising on market inefficiencies has earned him a personal wealth of $19.8 billion.
Despite his high-risk appetite, Cohen has comprehensive risk management systems that involve position sizing, stop-loss orders, and diversification to hedge bets.
He founded one of the most successful hedge funds, SAC Capital Advisors, which charged for insider trading. The company repaid investors $1.8 billion in penalties, and Cohen faced a two-year ban on managing investors' money.
In 2013, he converted his fund into a family office and adopted the Point72 Asset Management name the following year. In 2018, Point72 became a registered investment advisor and began managing capital from external investors.
Point72 manages assets worth $41.25 billion spread across 2,113 securities, according to a company 13F filing for Q1 2024.
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