Steve Cohen on How to Build Your Investing Career: Part One

You're going to learn, you're going to create new experiences. You're going to learn how to relate in the world. You're going to be talking to corporate CEOs. You're going to be talking to other smart people in the firm, and you learn. You observe things that you think are really interesting and things that actually matter to you and maybe, you know, other things you just kind of discard and say, 'Okay, that person does that, but that's not my thing.' And so you're constantly refining who you are

and essentially building a strong foundation that holds you in good stead for the rest of your life. Hi, I'm Jamie Goodfriend, Director of the Point72 Academy, and welcome to part one of a special two-part episode with Steve Cohen, the founder and CEO of Point72 and the owner of the New York Mets. In our first episode with Steve, he told us about how he turned his passion for investing into a career. For those of you just tuning in, Steve began his investing career as an options trader on Wall Street and eventually managed a multimillion-dollar portfolio and a trading team before launching his own hedge fund. More than three decades later, Point72 has grown to over 3,000 employees worldwide and manages more than $30 billion.

In this episode, you'll hear Steve's perspective on growing and leading a business, the qualities that distinguish a great investor from a good one, and how our approach to talent development has prepared analysts and PMs to build enduring careers with us. Joining us as our host is Harry Schweffel, our Co-Chief Investment Officer, who started at our firm in 2008 as a portfolio manager trading stocks in the consumer, industrial, and technology sectors. With that, I'll turn it over to Steve and Harry. Enjoy.

The comments, views, and opinions expressed in the podcast are those of the speakers and do not necessarily represent the views of Point72 Academy. All information provided herein is for informational purposes only, is not investment advice, and should not be deemed as a recommendation to buy or sell securities. All investments involve risk, including the loss of principal. This podcast does not constitute an offer to sell or the solicitation of an offer to purchase any security or investment product. Any such offer or solicitation may only be made by means of delivery of an approved confidential offering memorandum. This podcast may not be copied, and it may not be distributed or furnished to or used by anyone other than the intended recipient without the express written consent of Point72.

Steve, thanks for joining us today. This is not your first podcast. You did one with Jamie, and I think it's our most listened to. Okay. And I would encourage...

The pressure's on to see if I can beat that.

Yeah, and if we don't, it could be me, not you. So hopefully we can nail it.

Yeah, this seat might just eject. But I would encourage anybody who hasn't seen that one or listened to that one to tune in because it was great. And it was primarily focused on your founding of Point72 Academy and that commitment to developing talent internally. Today, we are hoping to spend a little more time talking about your personal philosophies as an investor, and then also as a business builder and a business leader. This is going to be a two-part episode, so that should be great for all of our listeners. So that's the goal for the next hour.

Great. Let's do it.

Here we are, summer of 2024. Firm is managing almost $36 billion, and we have hundreds of independent teams. When you think about it, what pushed you forward along the journey and what are some of the big decisions that you made along the way?

I mean, you got to be forward-thinking. I don't like resting on our laurels, what we've done. I used to drive my management teams crazy because we'd have a great year and I wasn't satisfied because I knew we needed to make changes to sustain the success we were having. And frankly, we never would have gotten to 36 billion if I didn't have that philosophy. I always describe it as you get to the top of the mountain, you get up there, there's nothing there. So, there's just nothing there. So, you gotta do it again, set a bigger goal, think about ways to, okay, this is where we are today. If we're gonna grow, if we're gonna double, how are we gonna get there? And, and I've always felt there have been opportunities to keep growing this firm.

Now, trees don't grow to the sky. And you can imagine growth slowing over time. But saying that, you know, the world keeps changing. It's dynamic. And we want to be positioned to take advantage of how the world changes and what the new technologies are and new techniques and sort of figure out how to deploy them within the firm and ultimately make it a better, more profitable, larger firm.

How about when you think about the principles that have underlain this growth of this business and just your career? I mean, you talk about it a great deal internally.

Every firm's different and they're run differently. Some firms, risk is number one. They need to monitor risk. Other firms, they're thinking about, you know, technology or something, some way of utilizing technology. And, and so, you know, it's a question of who you are, what matters to you most, and can you live out of that? And then that, therefore, you're being true to yourself. And, and that, typically, firms take on the character—you know, the characteristics, the character—of, of, of the founder. And, and, um, I think that's true in the hedge fund industry, you know, you know, when you think about people who have founded a lot of these firms. And so, so, yeah, it's—it comes down to who I am. What do I believe in? You know, I'm entrepreneurial by nature.

I'm a culture guy. I feel like I owe the people in my firm as much—I need to give to them as they need to give to me. We want to be a performance culture. I don't want to settle for mediocrity. I don't like being mediocre. So, those are just some of the things I like to do, which reflect who I am and how I think.

It's remarkable because I've heard you think about our business like that. And at the same time, I've heard you push PMs at the level of their business to think about what's next and what the goals are and how they're going to accomplish them by breaking it down. So, it's interesting how that carries through from the top down. You've seen a lot of investors go through all kinds of markets, and you've seen a lot of green analysts grow up to be great PMs. What gives those folks the ability to have durability and tenure in this game?

Well, listen, they've got to be passionate about what they do. You can't do a job and, you know, not love what you do. And, you know, you don't love it or you don't—you're not motivated by it, it's going to be reflected in the work you do. So, you need that as a base, obviously. I mean, I was passionate about the markets. So, it was an easy decision for me. I knew what I was going to do, okay, because I loved it. I couldn't wait for Mondays. I mean, I hated my weekends because I couldn't wait to get back and for the markets to open. I mean, that's fun, you know. When I look at some of the athletes, you know, baseball players, I mean, you know, they can't wait for spring training. They can't wait to, you know, work out, even in their off time.

You know, when the, when the off-season, they're working on something because they love it. When you look at the professional golfers, they're practicing on something, trying to improve, looking at the data, saying, 'I can be even better.' They're in a constant state of improvement. That's because they love it. So that would be my recommendation. Find the thing you love because it's so much easier. You'll be so much more motivated to accomplish great things.

It's a great segue into talking about greatness. You know, I listened to a podcast you did a few years ago where you talked a lot about the topic. And it was, it was fascinating to hear you talk about what it takes and how some people miss out on it. You touched on a little bit there with discipline. But when it comes to that next level and greatness...

Well, it's hard to be great, right? I mean, what's great to most people may not be great to you. The amount of effort, motivation, passion that's required to do extraordinary things don't happen by accident. They happen because you're determined, that you are constantly in a state of improvement, that you're open to the things you don't do well. It's being vulnerable, you know, knowing that you don't know what you don't know. It's being opportunistic, taking advantage of opportunities to learn new things and learn from people who have maybe been down the path that you want to go down, and taking advantage of those opportunities to have conversations with those people. I always describe Point72 as, you know, if I were new in this firm, I'd be a kid in a candy store, you know, trying to, you know, all the wisdom, all the people that are doing all these interesting things in this firm and trying to learn from them.

You don't have to reinvent the wheel, but you've got to understand things that maybe you didn't know existed. And so you're learning new techniques, new ways of doing things, new ways of looking at the world. And that's exciting, right? I mean, now you're broadening out your capabilities. You're being the best version of yourself. And, you know, there's a great deal of satisfaction when you see yourself improving in whatever you're trying to do.

And we hear you talk a lot about how big a role discipline can play in your favor and how focused you are on discipline as a way to set oneself apart.

I mean, the talent in this industry is exceptional. There's a lot. Everyone's really smart. And the question is, can you be committed to the things you want to accomplish? And that requires discipline—doing it day in, day out, regardless of how you feel, whether it's, you know, an athlete being in the training room every day, no matter how they feel, or taking in data and trying to figure out how to parse it in the way that will improve their performance, or learning new ways of doing things and improving some of the skills. I mean, a baseball player, um, they might be a great hitter and a mediocre fielder. Can they become a great fielder? Well, how do they do that? Well, they're going to have to practice.

And they're going to have to spend hours and hours laboring over the things that maybe they've never really labored over before. But if you do, if you, if you're consistent in that approach over time, you'll see improvement, and that's what it takes. And that's who you're competing with: people who are improving all the time. And, and, uh, and that requires, uh, you know, a mindset, uh, a mindset of, of being disciplined and, you know, making sure that you're doing the things that you should be doing every day, you know, and not when you feel like it.

How does that thinking influence the way that you run the firm today and things like your core principles around development?

Yeah. You know, I've always felt Point72 is a firm that likes to develop talent, either through our Point72 Academy or Point72 LaunchPoint, just some of the programs we have. My view is that our people should be in a constant state of learning, a constant state of education. And so we want to develop people. We view coming to Point72 as we want to help you accomplish—we want to help you learn, educate you on what's possible. We want you to meet people who have done the things that you want to do. And if I, like I said, if I, as a kid in a candy store, I'd wanna be picking their brain. 'How'd you accomplish that? What were you thinking? Did you even know you were on that path? What did it take to do the things that they've done?'

You know, and so you don't have to reinvent the wheel. And so I'd be, if I were someone in this firm, I'd be soaking it all up and trying to move my career forward.

It's interesting just listening to you talk. You're giving these nuggets around how in any given room you're the one asking the most questions and in any forum looking to learn the most based on who's in there and who's around you?

Yeah, I mean, I'm not afraid to look stupid, okay? Like, I know what I know, but I don't know everything, right? And so when I'm in, you know, I can learn from people in this firm. I can learn from, you know, people, you know, at the Mets. I can learn from—you know, every, every opportunity I have, I like to ask questions and try to understand why, you know, why do we do it this way? You know, what can we do better? Um, and, and, uh, you know, sort of pick, you know, other people's brains on, you know, how they think and, and they're, you know, sometimes, you know, they're the experts in, in, in, in what they do. And, and I can, I can figure out a situation pretty quickly, synthesize down to, you know, what I think I need to know.

And, and, and so I'm not afraid of looking bad. You know, I'm not afraid of like, 'Oh, you know, wow, he did...' Well, 'He asked a lot of questions. I guess he doesn't know that much.' Well, maybe I don't. So what? You know, like that's, that's, that's the fun part, you know, learning something and/or being exposed to something that's new and different.

Yeah. That curiosity and that commitment to, to just learning more perhaps explains a little bit about why we run the firm with a no-one-size-fits-all kind of a mindset. And I think it differentiates us versus some of the other firms out there. So if someone's looking at their career and they're thinking about the Academy, Point72 Academy, or they're thinking about being a PM, or they are a PM and they want to look for a new firm and partnership, how should they be thinking about Point72 in terms of the place they want to build their career?

Yeah, I mean, that's my philosophy. And I think it's proven out by what you see as far as all these different funds and investors. Everyone does this slightly differently. And I don't think there's any one way to invest. Some investors are long-term investors, others are short-term. Some are value, some are growth. Some like international markets, some like US markets, some like macro, right? You know, thinking in sort of a macro way, some like to be bottom-up. And so there's so many different ways in this industry to, you know, to do something, you know, to invest in, you know, and so the question is what, you know, what turns you on, what motivates you, what interests you? And so, you know, my view is that, you know, having people with different capabilities, different ways of looking at the world, different ways of doing things just adds to the total IP of the firm.

And we can all learn from the people amongst us in ways that we hadn't even thought about.

Right. Creates a very rich environment for finding mentors, too.

Yeah, absolutely. You know, I mean, you know, when I get excited because, you know, I always say I learn the most from the people in the firm. Like there's always someone doing something new and different. And it's like, 'Huh, that's interesting. You know, I never thought of it that way.' And which is why we like to bring in young people, you know, who are very talented because, you know, they're open to new ideas and they're up on the new techniques and new technologies and

And, uh, you know, can, you know, look at the world with fresh eyes. Yeah, powerful new perspective. You talk a lot about this being an ideas business and, uh, this being, you know, making money in liquid public markets. Obviously, there are some key fundamental skills that analysts need to develop, but what are some of the intangibles that you look for when you're meeting a potential investment professional?

Okay. I mean, ultimately, you know, how passionate are they, how commercial they are, right? I mean, you know, do they want to be right or they want to make money? Okay. Like, I mean, a lot of people like to be right in this world, in our world, and they get rolled over by the markets. And so, you know, I want to know how flexible their thinking is. The average PM is only right 53, 54, 55% of the time. That means you're wrong a lot. And the question is when you're wrong, what do you do about it? Um, and so, you know, when I interview people, those are the things I'm kind of searching for. Ultimately, you know, I got—I'm going to be working with this person hopefully for the next five to 10 years.

And so I want to know who they are, what makes them tick, and do they fit in, in this firm? Um, you know, creative thinking matters. Um, you know, a lot of times situations are complex. How do you break them down to try to figure out, you know, what, what the proper approach is? Um, and, and the other thing is, you know, you know, things build on themselves. Where you are year one, you're going to learn, you're going to create new experiences. You're going to learn how to relate in the world. You're going to be talking to corporate CEOs. You're going to be talking to other smart people in the firm, and you learn, and, and—you observe things that you think are really interesting and things that actually matter to you, and maybe other things you just kind of discard and say, 'Okay, that person does that, but that's not my thing.'

And so you're constantly refining who you are, and you're essentially building a strong foundation that holds you in good stead for the rest of your life.

And how do you think analysts develop that feel for... ideas, big ideas, good ideas, feel for the market?

Yeah. I mean, listen, that's just, I mean, in the end, you know, this is pattern recognition and, and, and, and knowing what you're good at. You know, my dad used to have a saying, a shoemaker makes shoes. I mean, you know, I also equate it to a pitcher. He's throwing, he's got a fastball, he's got a slider, he's got a curve ball and he's got a change up. Fastball, fantastic. Slider, really good. Curveball, eh. Changeup, not so good. You know, pitchers are throwing the curveball and the changeup 45% of the time. Like, maybe throw it a little less and throw your best pitch. So the question is, what are you convicted in? What do you know well? What is the foundation, the base of what you do that you can depend on over and over again?

Can you act out of that conviction and not be swayed by just what other people are doing? And it really, it shows you the fortitude of who you are. And just say, 'Yeah, I don't care about that. That's something someone else will do, and I'll...' just because I'm not good at that or I'm not interested in that, and not feel like you're, you're missing out. And, you know, nothing. Now, you may say, 'That's something I may want to learn over time and, and get better at.'

And there's nothing wrong with that.

But you need a strong foundation of who you are and how you think, and know what you do well.

We'll be back with the second part of this conversation with Steve for a glimpse of what a typical day looks like for him and his advice for candidates on how to stand out in the interview process. Stay tuned. Listen to our entire series to hear from portfolio managers, analysts, and others on the ins and outs of this industry and learn how you can become a part of it. Visit our website at Point72.com/Academy to learn more about how we are training the next generation of investors.