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Trying to Think Like Stevie Cohen

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The Steven Cohen profile we mentioned earlier is not surprisingly drawing increased attention to Cohen’s investments. One of the first things we did after reading the story was pull up the SEC website and search for filings disclosing SAC investments. (Ed: Hey—maybe this is the whole reason Cohen opened up to the journal, because he wanted to attract some attention, and additional investment money, to the investment’s he’s already made. JC: Woah. Slow down there. Even we aren’t that cynical. Yet.)
Today Peter Cohan of Blogging Stocks takes a look at SAC accumulation of more than 5% of AC Moore Arts & Crafts Inc, a money losing arts and crafts company. Cohan tries to figure out what Cohen might be thinking in making such a large investment in the company (although he admits that if he knew why Cohen made his investment decisions he’d probably live in a bigger house).
The short of it is that Cohen may be looking at three factors: timing (the stock was way down when he bought it and rose shortly afterwards), undervaluation (six analysts were projecting big growth for the company when Cohen bought in), and seasonality (the company tends to do well in the fourth quarter while losing money in the first three). Each is more fully explained on Blogging Stocks.
This kind of analysis goes along with what the Journal article suggests—that Cohen may be adopting a more fundamental based investment strategy.

Who is Steve Cohen and why is he betting on art supplies?