Axe Capital (Steve Cohen's) Playbook

The Bobby Axelrod we love from Billions is the real-life Steve Cohen, an options trader --> fundamental hedge fund manager --> criminal? --> multi-strat hedge fund manager.

Here is a distilled rundown of Cohen's top principals to trade by.

1) Find data no one else has. Seize exclusivity ASAP.
(a) "Canvas research" was an internal division that synthesized supply-chain data on metals, lumber, hospitality trends, etc. by calling up privately-owned suppliers, brokers, and middlemen (like a proprietary expert network)

it was one of the first things Cohen set up to support his flagship long-short fund and the guy who headed this up (Kirk) has many fond memories about driving to the middle of nowhere to onboard wholesale and retail distributors, sleeping in his car to find new sources of info

finding data others don't have takes hustle

1) (b) I spent time on the Energy team. They used highly creative tactics like sending scouts to Middle Eastern ports to count the # of oil barrels loaded onto tankers each morning
... then the regulators found problems with this
... then they pivoted

1) (c) Tracking repeat private jet routes to predict M&A activity before public announcements
(this was rumored... I can't personally confirm or deny)

1) (d) Cohen acquired Aperio in 2013 (originally led by Michael Recce, an infosys professor) to be the firm's "data insights factory" -- at the time, it was still novel and high-risk (the other fundamental shops followed suit years later on the "quantimentals" bandwagon)

alternative data sets (without mentioning source names, which you can probably guess) consisted of credit card data, parking lot data, satellite, app downloads and mobile engagement metrics, ratings, etc.

re: math, it was mostly regressions and slightly fancier regressions

1) (e) We paid hobos to sit outside Goldman Sachs with walkie-talkies on 200 West St during lunch hours in order to listen for M&A leads ...

JK, this only happened in my dreams

2) Don’t just invest in asymmetrical risk-reward. Operate on asymmetrical risk-reward.

What do I mean by this? Cohen is not just a trader. He's an entrepreneur. Most of his alpha is not got from trading. It's got from taking asymmetrical operational bets. Such as ...

2) (a) Being the face of Billions. Why is this a good bet? It's great marketing to the masses, but how can mass appeal possibly help Point72's operations...?
Truth: it matters for recruiting. For a top-notch techie born after 2000, Billions pumps adrenaline better than FB (maybe)