Skip to main content

Steve Cohen's SAC Capital is a group of hedge funds considered by many to rank among the top investment firms in the world. In 2007, its International Fund was up a reported 13% for the year.

At Stockpickr.com, we keep track of Cohen's stock moves with the

SAC Capital portfolio

.

One position of SAC's worth keeping an eye on is

Cabot

(CBT) - Get Cabot Corporation Report

, the fund's second-largest position.

Cabot is a maker of specialty chemicals and carbon black, which is by weight the biggest ingredient in making tires. The carbon black business may not be the most dynamic business, but it's a necessary one, and it supplies 90% of the company's current cash flow.

Back in September, the board authorized the repurchase of 5 million shares of common stock. This massive increase brings the total number of shares authorized for repurchase to 10 million in total.

Cabot, which trades near its 52-week low, has a forward price-to-earnings (P/E) ratio of 11. On valuation terms, I believe the stock could be undervalued by as much as 60%, as its business model is misunderstood. Cabot shares have been under pressure for some time, mostly due in part to its tire business. However, the global trend for auto sales and tire sales worldwide is up.

When you factor together management's push into Asia, its carbon black business, its drilling-fluid business and the $20-per-share that the company's inkjet business is worth, Cabot shares should see some nice upside.

Another one of SAC's holdings is

Wyeth

( WYE), which just received Food and Drug Administration

TheStreet Recommends

approval for the antidepressant Pristiq

. Some analysts believe that Pristiq could help offset the loss of revenue the drugmaker will encounter when antidepressant Effexor, one of its top-selling drugs, loses patent protection in 2010.

Cohen has been very active in the biotech sector, especially with

Pharmion

( PHRM), which has a forward P/E of 50 and a P/E-to-growth (PEG) ratio of 10.3. Cohen has been actively talking with Pharmion management about the pharmaceutical company's operational plans. That suggests he believes there is much more value to unlock.

Keep an eye on these as well as his other positions -- such as

Albemarle

(ALB) - Get Albemarle Corporation Report

,

Century Aluminum

(CENX) - Get Century Aluminum Company Report

,

Mylan

(MYL) - Get Viatris, Inc. Report

,

Armstrong World Industries

(AWI) - Get Armstrong World Industries, Inc. Report

and

OM Group

(OMG)

-- in the

SAC Capital portfolio

.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.

James Altucher is president of

Stockpickr

LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for the

Financial Times

and the author of

Trade Like a Hedge Fund

,

Trade Like Warren Buffett

and

SuperCa$h

. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback;

click here

to send him an email.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.