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Pinch hitter

15 September 2020 By Anna Szymanski

Steve Cohen’s purchase of the New York Mets may help him craft a better comeback. The billionaire chief executive of hedge fund Point72 has had a rocky road back into the public eye after his former firm was investigated for insider trading. He may find outperforming in the ballpark is easier than in the markets.

The long-time Mets fan has agreed to take his 8% stake up to 95% in a deal that values the franchise at some $2.5 billion, according to Newsday. That’s a record for a North American sports team. And he beat back stiff competition for the prize, including from singer Jennifer Lopez and former New York Yankee Alex Rodriguez. The sale isn’t final yet, though – he needs to win the approval of 23 of the other 29 Major League Baseball team owners.

The positive press coverage of this deal marks a big change from a few years ago. Cohen’s previous shop, SAC Capital Advisors, had to pay almost $2 billion in fines and civil penalties related to insider-trading investigations. While Cohen was never charged, the much-vaunted stock picker agreed to a two-year hiatus from managing other people’s money.

His recent re-emergence has been a mixed bag. Point72, the successor firm to SAC, has increased assets under management to more than $17 billion since Cohen’s ban on managing outside capital expired in 2018. It also employs more than 1,500 people. But its returns underperformed the S&P 500 Index through 2019, according to Bloomberg. Multiple women who have worked at the firm have filed complaints alleging discrimination.

Granted, investing in a baseball team might not offer great monetary returns. But the goodwill that Cohen could garner if he revives the long-underperforming Mets may be worth it. Forbes pegs his net worth at over $14 billion, more than the current top-three wealthiest baseball-team owners combined. He could use this largesse to pull in top players: Unlike, say, the National Football League, baseball doesn’t cap team-member salaries, though it does assess a so-called luxury tax if these exceed a certain level.

Cohen’s Point72 has improved its game so far this year, up 9.3% to the end of August, Bloomberg reported, roughly one percentage point better than the S&P 500 Index’s showing. But keeping that going in a liquidity-drenched market may be harder than the Mets beating their Bronx Bomber rivals.

 

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