Breakfast Keynote: On Point with Point72
IRC Domain 8: Capital Markets & Capital Structure
Summary by Lisa Ciota
Speaker: Perry Boyle, Head of Equities, Point72 Asset Management, L.P.
Moderator: Chris Stent, Founder, Mission Street Capital Advisors, LLC (former VP, IR, McDonald’s Corp)>
During this fireside chat, Point72’s Head of Equities, Perry Boyle, shared insights on the hedge fund’s investment approach, as well as perspectives on the changing investment landscape and the implications for IROs.
Investment Approach
- Point72 combines fundamental research, quant strategies, big data and artificial intelligence to manage its $13+ billion of assets, of which approximately 75% is actively managed.
- Because Point72 allows its portfolio managers a high degree of independence, at any given time, five to six portfolios may be simultaneously involved in a stock – some long, some short. Knowing requests for meetings from multiple people at the same firm can be frustrating for IROs, Point72 works to coordinate such requests internally.
Perspectives on Changing Investment Landscape
- Point72 leverages technology to stay one step ahead of other traders’ technologies that track, predict and attempt to front-run Point72’s trading activities.
- Boyle noted that being publicly traded no longer assures a valuation premium. As a result, private companies are waiting longer to go public and may not even need to do so given the deep pockets of private equity and venture capital investors. The sell-side is in a secular decline due to fewer publicly traded companies, the low level of IPOs and advent of MIFID II.
- Boyle sees rising interest rates, a full-employment economy and tighter monetary policy as signaling a shift toward increased volatility and lower stock correlations – a reversal from the recent past. Point72 expects this new environment will favor real assets and fundamental investors will outperform.
- However, Boyle believes there will continue to be bellwether companies that serve as a proxy for an investment theme. For example, Tesla is a proxy for the electrification of vehicles and Amazon is a proxy for the decline of brick-and-mortar retail.
Advice for IROs
- The IRO’s role is to provide relevant information to the relevant people at the relevant time. This is easier said than done, since good news comes out over time, but bad news comes out catalytically.
- IROs need to know the numbers and buy-side and sell-side sentiment surrounding those numbers – and use that knowledge to advise and prep management. IR should not over-promise and should be forthright about the company’s challenges.