Even with alpha strikeout, Steve Cohen scores
NEW YORK, July 31 (Reuters Breakingviews) - Hedge fund mastermind Steve Cohen is best known for his savvy trades, but it doesn’t take an investing whizz to make money in baseball. His New York Mets are one of the worst teams in the league despite a record-setting $364 million payroll. In sports, however, beta is alpha.
Cohen bought full ownership of the club in 2020 for $2.4 billion and spent lavishly on the roster. With a losing record about two-thirds of the way through the 2023 season, the Mets over the weekend dealt ageing star pitcher Max Scherzer, a sign they’re thinking about next year. Even so, the Mets are already worth $500 million more than Cohen paid, according to Forbes, a nice uplift for substandard performance. Point72 generated a 10% return last year, based on the FT’s reporting. At SAC Capital Advisors, Cohen routinely outpaced Wall Street with average annual earnings of 30% before the firm pleaded guilty to insider trading charges in 2013.
Losers are often winners in sports, financially speaking. Dan Snyder just sold his woeful Washington Commanders for $6 billion; Snyder paid $800 million for the team and its stadium in 1999. Similarly, a group led by former basketball superstar Michael Jordan recently offloaded the pitiful Charlotte Hornets for $3 billion after buying the franchise in 2010 for just $275 million. The only insight required in sports is that the futures market for billionaires will keep growing.