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‘Markets don’t come back in a straight line; after an earthquake there are tremors.’
That’s billionaire trader Steven A. Cohen waving a cautionary flag to his Point72 Asset Management team, according to an internal memo cited by Reuters on Tuesday.
“We need to continue to be disciplined,” Cohen told his staff, referring to lure of a recovering market after the coronavirus-driven lows. “We are seeing plenty of opportunities to generate returns, but I don’t want us taking undue risks.”
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Cohen also said his $16 billion firm has effectively managed risk so far this year with performance that is “essentially flat” despite the gutting market downturn.
The note follows a conference call with President Trump last week that, according to Reuters, focused on the U.S. economy and the Federal Reserve. Dan Loeb of Third Point LLC, Stephen Schwarzman of Blackstone Group, Robert Smith of Vista Equity Partners, Paul Tudor Jones of Tudor Investment Corp and Ken Griffin of Citadel were also reportedly on the call.
Cohen pocketed an estimated $1.3 billion last year after his main hedge fund at Point72, which is based in Stamford, Conn., delivered a 14.9% return.
Those market “tremors” Cohen mentioned are spilling over into the second quarter, with the Dow Jones Industrial Average DJIA, -3.39% US:DJIA down big on Wednesday after closing the books a day earlier on its worst quarterly performance since 1987. The S&P 500 index SPX, -3.61% and tech-heavy Nasdaq Composite COMP, -3.08% were also firmly lower.
