- Billionaire hedge fund Steve Cohen is making a professional leap into private markets.
- Cohen is starting a fund that will focus on artificial intelligence.
- Cohen's track record in private market investing isn't public knowledge.
Billionaire hedge fund and stock picking veteran Steven Cohen is looking to jump into the private market through a new hybrid venture and private-equity fund, The Wall Street Journal reported.
Unusual Fund Style
Cohen is looking to raise $500 million to $900 million to start a new fund that will seek companies that are either: 1) early-stage tech companies who focus on artificial intelligence, or 2) operating companies that would benefit from AI technologies.
This would mark the veteran investor’s first major professional leap into the private markets, according to WSJ. Few details have yet to be confirmed, namely how much Cohen would charge clients and what is the fund’s lifespan.
A spokeswoman for Cohen’s family office Point72 Asset Management told WSJ Cohen has been investing in companies for around 30 years and he is always “exploring new business and investing opportunities.”
Cohen’s hedge fund SAC pleaded guilty to insider trading in 2013 but Cohen himself was never charged with a crime. As part of a settlement, Cohen agreed on a two-year ban on collecting and managing outside capital. This led to him creating a family office in 2018.
Public Market Experience
Cohen’s investing success over the decades comes from a combination of “reading the tape,” analyzing fundamentals, and most recently through a blended combination of quant and fundamental approaches.
While some of these attributes can apply to private markets, others don’t. Most notably, identifying a good company is no different if they are public or not. But on the other hand, private companies don’t trade on a stock market so “reading the tap” would be impossible.
Not A Stranger To Private Markets
Cohen has been investing his own personal money in private companies for decades but those records don’t need to be made public.
Part of Cohen’s private wealth has been invested through a unit of his family office called Point72 Ventures. The fund has more than 50 companies in its portfolio, of which at least two were acquired by notable companies.
Specifically, Point72 Ventures sold its stake in DeepScale to Tesla and Apprente to McDonald’s.
Cohen is known to attend Y Combinator’s Demo Day to scout entrepreneurs who showcase their products to attendees. He also attends roundtable discussions hosted by Silicon Valley venture firms.
Cohen reportedly told people close to him he is attracted to the energy and excitement of startups as it reminds him of his early days building up his own hedge fund from scratch, according to WSJ.
According to WSJ, big investors can also look at private companies as a way of better understanding trends that impact their public-market investments. Private companies are typically first to embrace new technologies before it can impact public companies.