Steve Cohen: Markets Underestimating Transformative Impact Of Artificial Intelligence

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Following is the unofficial transcript of a CNBC interview with on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Wednesday, April 3.

Steve Cohen on New York Mets ownership: I view it as a civic responsibility

ANDREW ROSS SORKIN: This morning we are in Kiawah Island, and we have a very special guest to bring you. Steve Cohen is here. He, of course, is the chairman and CEO and president of Point72, a long-time veteran of Wall Street and hedge fund manager and beginning his fourth season now as the owner and chairman and CEO of the New York Mets. And it is great to have you on the program.

STEVE COHEN: Thank you, Andrew.

SORKIN: For the very first time.

COHEN: Yes.

SORKIN: For the very first time.

COHEN: Hey, you know, you’ve got to try everyone once, right?

SORKIN: You’ve got to try everything once. So, we’ll see whether we get to do it more than once. I want to talk to you about so many things. I want to talk to you about sports, the business of sports, owning this team now.

COHEN: Sure.

SORKIN: And then I want to get into the markets and what you’re thinking about more broadly as well. But where I wanted to start was actually, the team this year –

COHEN: Yes.

SORKIN: Unfortunately –

COHEN: Yes.

SORKIN: Given – given – given the win streak or really the opposite in terms where we are –

COHEN: Yes.

SORKIN: How do you think about that as an owner, but how do you think about that as a hedge fund manager?

COHEN: Well, I mean, we’re only – it’s only four games into the season, right?

SORKIN: Right.

COHEN: It would be the equivalent of getting off to a bad start. Let’s say in a hedge fund year you have a – you have a couple down days early in January. You’ve still a lot of time left to, you know, do what you normally do. And so, yes, nobody wants to start 0-4. I mean, but, you know, it’s early, right? And, you know, during the season you’re going to have losing streaks. We just happen to have one at the beginning.

SORKIN: So, what is this like for you now? I mean your whole life I think has fundamentally changed. You’re now in the public eye in a way that —

COHEN: In the public eye, yes.

SORKIN: That you haven’t been.

COHEN: Yes.

SORKIN: Well, I should say, there’s been a shift in public eye and now you’re actually doing interviews and things and being more public.

COHEN: Yes.

SORKIN: How do you feel just about that?

COHEN: You know, I – it’s something that I knew buying the Mets would be much more public and – but I enjoy it. You know, like I – I realized, I enjoyed it. I had no idea, right? When you sit behind screens for as long as I have and you’re kind of, you know, not necessarily, you know, have to do that type of stuff. And so I actually enjoy it. I actually enjoy interacting with the fans and doing the press conferences and, you know, it’s – it’s – you know, it’s just a stretch for me. You know, something different.

SORKIN: And how much of being – of doing what you’ve done in business is similar or different to this in terms of the analytics, the way you think about – I mean you trade stocks. You own a team. You trade players. Is it – is it similar or totally different?

COHEN: I mean, it’s different. I mean, you know, people think that I’m making – I’m not making the decisions. I mean my baseball people are making the decisions. My job is to, you know, when they – they need me to support their decision, you know, they come to me and say, this is what I want to do. I’ve never said “no” to anything. And so – I mean we have discussions and we talk about it, but I’m not – I’m not making – you know, those ideas are not coming from me. And which is totally differ than running my hedge fund. My hedge fund, I’m much more involved. But, you know, frankly, in my hedge fund also we have 200 portfolio managers. I’m not telling them what to do either, OK? You know, I give them the risk limits and things like that. And I’m always available if they need to discuss anything. So, I’m used to operating in a very decentralized way. And I give people a lot of room.

SORKIN: There’s big question about baseball, both the valuations of these teams. You spent a lot of money on yours. And also how much money these teams spend on a given year for players, the different markets, big markets, small markets.

COHEN: Yes.

SORKIN: What do you think of the system right now in terms of what’s happened in baseball?

COHEN: Yes, I think, you know, we’re in one of those moments in baseball where people are thinking about, OK, what do we like about the system, what we don’t. You’ve got 30 owners. You’ve got 30 different opinions. And so, you know, we’re still trying to figure it out. There’s no doubt that smaller market clubs aren’t crazy about large-market club spending a lot of money all within – you know, we’re all operating within the rules that baseball sets out.

SORKIN: Does money buy winning? I mean people say money, but it doesn’t buy love.

COHEN: Well, clearly – clearly not.

SORKIN: Right.

COHEN: OK. OK. Because we tried that. I mean the real problem is, if – if you’re trying to build a team through free agency, that’s such a tough place to be because you’re – you’re fighting the aging curve. You’re buying players based on their previous history, but they’re getting older. As they get older, performance over time declines. And so it’s a tough place to be. So, what you really want to do is develop talent, which is no different than what I do in my hedge fund, OK? And that – and that’s the similarities between the two.

SORKIN: Right. OK, but you have been famous for cutting your losses in the hedge fund world.

COHEN: Yes.

SORKIN: Famously. If things are not going well, you cut your losses. Can you do that in baseball?

COHEN: Well, I kind of did it last year, right?

SORKIN: Right. You kind of did.

COHEN: Kind of did. Kind of did.

SORKIN: That’s where I was going – that’s – that’s where the question was going.

COHEN: Oh. Oh. Yes, so, you’re leading – you’re leading me to the – to that question. But, yes, I mean, I looked at it and realized that the team was probably not going to make the playoffs. And even if it did, probably wasn’t going to get very far in the playoffs. And so it was a – it was a – I think at that point we had a 15 percent chance making the playoffs. A lot of teams in front of us. It would have been hard to pull off. And – and so, you know, we had contracts that were, you know, at – felt it wasn’t going to change in 20 – in ’23, in ’24, it probably wouldn’t get any better. So, you know, I did – I did a complete pivot. And I think I shocked baseball in the extent that I did it. But, for me, it’s just natural because, you know, I looked and said, OK, I don’t like the – I don’t like the positions I have and so I wanted to make a change.

SORKIN: You want a ring. How much – how many years you think it will take you to get there? How much will it cost?

COHEN: Well, look, the cost – I don’t care about the cost side. I mean I think over time my —

SORKIN: But do you think –

COHEN: No, no, no.

SORKIN: You don’t think about this as –

COHEN: No, the –

SORKIN: As philanthropic do you?

COHEN: I do.

SORKIN: You do?

COHEN: That’s why I bought the team, OK. That’s exactly why I bought the team. And – and, you know, I said – and I said in my original press conference, if I can make millions of people happy, how cool is that? And so I actually view it as a civic responsibility. And – and, now, listen, nobody wants to lose money forever and spend money and not – not have success. And I – and, to me, I deem success as not only winning the World Series, getting in the playoffs and winning the World Series. It’s also developing like a deep farm system that creates talent over – you know, over the years, over and over again.

SORKIN: Right. So, on the – but on the economic piece of it, though. What I was going to ask you is, the valuations of these teams.

COHEN: Yes.

SORKIN: Where do they go? In a world – we were talking about Jimmy Pitaro here from ESPN. We’re all wondering what’s happened to linear television. I know you can’t talk about individual stocks. We were talking earlier in the week about how – how your company had – or some of your PMs clearly bought – bought Fox.

COHEN: Yes.

SORKIN: What do you think happens to the media landscape, if you will, and this is sort of an investment question as it relates to whatever happens to that impacting the valuation of sports teams like your own?

COHEN: Well, you would think that valuations are tied into profitability, right, or some – some metric. And, you know, right now, because of what’s going on in the cable industry and – and – and media in general, you know, revenues for teams are probably going to go down over the short term as we figure out what the new model is. It’s clearly going to be streaming, but the question is, is it going to be a bundle? Would, you know, other – other – we’re all – baseball – all sports are trying to figure it out. And – and, you know, some – some sports are better off than others. NFL does a national package, right? And most of their revenues come from – from that. In baseball, you know, some revenues for teams are local revenues. And so – and so that’s a problem, right? Because now revenues are going down. Now, when you look at the appreciation of – of, let’s take baseball. Baseball’s only appreciated teams like, I think, like 6 percent a year since, you know, the early 2000s. I don’t think that’s extraordinary returns. And so when you think about it, you could have probably done better in an index fund.

SORKIN: Let me ask you this though. One of the – one of the pieces or component parts is the future of betting in the business. Real estate. One of the things that is in play with Citi Field –

COHEN: Yes.

SORKIN: Is this idea that you might be able to build a 50-acre, both park and mall and all sorts of things. And a –

COHEN: Not a mall. Not a mall. Not a mall.

SORKIN: And a casino.

COHEN: OK.

SORKIN: And a casino.

COHEN: Yes. Yes, we call it an entertainment complex. Music, gaming, 1,500 hotel rooms, a 25-acre park. We’re going to build a separate area where fans can go and go to restaurants. Yes.

SORKIN: Right. What’s it going to take to get that approved in New York? How much has to be given by the taxpayers? We were just talking to Ted Leonsis, who spoke about what’s happened in Washington. Meanwhile, we also saw what happened in Kansas City this morning which was overnight. Those – those taxpayers don’t want to pay for it.

COHEN: I totally get that. We are financing it privately. It’s going to be an $8 billion project. You know –

SORKIN: And you think you have to get nothing from the city?

COHEN: I mean, you know, I’m not as steep in the weeds on – but, generally, I would say the vast, vast majority of it – of the money is coming from private sources, me and my partner.

SORKIN: Right. And the casino piece, the betting piece –

COHEN: Yes.

SORKIN: How important is that?

COHEN: Well, that’s the economic engine. You can’t spend $8 billion and have a bunch of restaurants. That’s not going to work, OK? So, you need – you need an economic engine. And – and that’s it. And, you know, that’s and if it – you know, that’s – that – that’s going to provide all the other great stuff.

SORKIN: As a guy in the markets –

COHEN: Yes.

SORKIN: How do you feel about betting as it relates to sports?

COHEN: Yes.

SORKIN: I mean the reason I ask is Ohtani’s in the news, right?

COHEN: Yes.

SORKIN: Everybody saying what – you know, what happened?

COHEN: Yes. Right. Yes.

SORKIN: By the way, I’m curious what you think happened there, but –

COHEN: I – I have no idea, but I’m going to trust him.

SORKIN: You’re going to trust him?

COHEN: I’m going to trust him. Yes. I –

SORKIN: Because?

COHEN: Because he just seems like someone that is so focused on his stuff that I could see how, you know, look —

SORKIN: But do you think that the league just has to figure out – I mean given – given the sort of superstar status that he has that they – they can’t let this –

COHEN: Yes. Yes. Well, they have to investigate. And they will, OK? I mean – and, you know, they’re good at that type of stuff and they’ll get to the bottom of it.

SORKIN: Separately, and we’re here at a big sports conference. You invested in golf in a big way.

COHEN: Yes. Yes. That’s right, yes.

SORKIN: You’re partnered now with Fenway as well as part of that.

COHEN: That’s right.

SORKIN: What is your thesis on golf?

COHEN: Yes.

SORKIN: And what do you think is going to happen with – with LIV as well –

COHEN: Yes.

SORKIN: In terms of – in terms of PIF and the Saudis?

COHEN: Yes, I mean, we – you know, we think it’s an interesting investment. It’s a global sport. Rounds are going up on a yearly basis. You know, and so we – we think the way it’s been run, we think we can improve the operations, improve – and make it much more profitable. I love golf. OK? I mean, you know –

SORKIN: You’re a golfer. You brought –

COHEN: I’m a golfer. I brought my clubs here.

SORKIN: You brought your clubs here?

COHEN: Right, I’m going to be on the range later today.

SORKIN: The wind is not good, just so you know.

COHEN: Yes. That’s OK.

SORKIN: You can blame the wind.

COHEN: You know something, it’s an outdoor sport, right?

SORKIN: Right.

COHEN: Same thing as baseball. Sometimes the wind blows. And – and – yes, so we think it’s a really interesting investment. Obviously, you know, golf’s at a moment where there’s a lot of stuff going on that needs to be worked out. But we think we can work it out. And – and we’re excited to get involved and – and help the sport grow.

SORKIN: You have a thesis, I’m told, that you actually shared with Yasir from PIF about the workweek. We always talk about sort of working from home, working from the office.

COHEN: Yes.

SORKIN: That you think is actually behind part of your investment in golf and actually may be your behind your investment in or thoughts about how the whole economy changes?

COHEN: Yes. Yes, I mean, I’m not – I would – I think I would have done the golf investment anyway because I think there’s a longer-term thought. But in my –

SORKIN: What’s your thought?

COHEN: My belief is a four-day workweek – workweek is coming. You know, it just – it — between the advent of AI, you know, generally, I just – it — you know, we – we hear from people that Fridays of just not – people are not as productive on Fridays. And so I just think it’s an eventuality. When it happens, hard to know. But that should fit into a theme of more leisure for people, which means golf rounds will go up and, you know, and interest –

SORKIN: Some people are going to play more golf on Fridays.

COHEN: And interest will go up. And so, yes, I guess courses will be crowded on Fridays, yes.

SORKIN: But what are the – what are the other investments ideas then around that idea?

COHEN: Well, anything around, you know, I would say leisure, travel, right?

SORKIN: Right.

COHEN: Experiences. All that type of stuff, right? I mean I – that makes, you know, if people have more time they’re going to – they’re – yes.

SORKIN: And are you – you don’t anticipate letting your traders and PMs not work on – frankly on Saturday they’re working, these guys.

COHEN: Well, if the market’s – you know something, if – if they’re – if they’re taking off Friday and they have a portfolio, that’s a problem, OK, if the markets are open. So, forget – forgetting us, OK? I mean the vast majority of – of people will get an opportunity, I think, at some point to have a three-day weekend.

SORKIN: You know, I’d – I’d asked you earlier how it feels to sort of shift into this more public role, but I am curious how it feels to be – you are now a beloved person in New York.

COHEN: Maybe. OK, I’m still – we haven’t won, OK?

SORKIN: And – well, we’ll see if you win.

COHEN: OK. Then we’ll see how long that lasts. Yes. Yes.

SORKIN: But that’s been a real – but that’s been a real shift from over – over the last ten years and all of the headlines, you know, ten years ago.

COHEN: Yes. Yes.

SORKIN: And I’m just so curious how you, on a very personal level have felt about whatever that journey has felt like.

COHEN: Well, I’m the same guy, OK? I haven’t changed, OK? It’s just so – I just think it’s so interesting how ten years ago, you know, obviously, tons of articles that were highly negative of me and my firm. And then “The New York Times” writes an article like a year – a glowing article. I’m the same guy, OK? And it just shows you that, you know, the world keeps turning. And, you know, it just – you know, enjoy your life and, you know, it’s just amazing what can happen.

SORKIN: I do want to talk about investing and where you where you are. I know you can’t talk about individual names. But put it in baseball terms given that’s your – that’s your – your other business now, what inning are we in? Are we in some kind of bubble in terms of where the equity markets are?

COHEN: I don’t see it as a bubble. I mean I think the markets are discounting some of what we – you know, they think AI is going to do for companies.

SORKIN: You think it’s discounting?

COHEN: Discounting. I – yes.

SORKIN: So you think that there’s even more upside as a result of AI?

COHEN: I do. I – you know, my view is, this is a really durable theme. I’ll give – I’ll give you one little anecdote. My CTO comes to me and says, I can save the firm $25 million by, you know, doing, you know, using these LLMs to improve our efficiency. Now, we’re – we’re a nice-sized firm. We’re not a huge firm. So, imagine what big companies can do. Just – and that’s just one thing, OK? So it gives you, you know, a little bit of a look into what’s possible.

SORKIN: Right. And so, you know, people there are there is a view is this is the AI boom, what does that mean for chips? What does that mean – you know, so, when you look at that, who do you think the winners and losers are?

COHEN: Well, I – listen, I’m not going to talk about individual stocks, OK?

SORKIN: Right.

COHEN: But there’s going to be – there’s going to be big winners and big losers, OK, because this is transformational. And – and so, you know, you’ve got to do the work and figure out, you know, what companies are going to benefit. And, frankly, it’s going to be companies that you haven’t even heard of. There will be new companies. I mean when you have technological change like this, you know, it sort of reminds me of the ’90s where the best new companies came out of that period.

SORKIN: But does then that mean we’re in 1996? I mean we’re in 1999?

COHEN: I, you know, we’re not in ’99, OK? I mean, I don’t think so. And so because I think it’s a durable theme, I think, now, it doesn’t mean it goes up in a straight line, right? I mean it takes – it may take a while for this AI theme, you know, actually to really take hold within companies and they’re trying to figure how to use it. And so – but when you – but this is so – it has the potential to change how my firm operates. If – if you’re a company and you’re not thinking about this. You’re – you know, you’re going to wake up one day and go, we’re in trouble.

SORKIN: We have Raphael Bostic from the Fed on in just a little bit. What do you think about where the Fed is today? Are you expecting cuts to come this year at all anymore. I mean how – how do you think about what the Fed’s doing? And how much that’s propelling the market one way or the other?

COHEN: Yes, you know, I think the market expects three cuts. I think that’s the number. I don’t – I don’t – I don’t disagree with that. I – you know, I think inflation’s been, you know, somewhat contained. And I think – I mean, ultimately, what it will come down to, is that a true statement or not? You know, we think – the Fed thinks they – you know, eventually it’s going to come down to 2 percent inflation rate.

SORKIN: What do you think?

COHEN: I think that’s going to be hard, OK?

SORKIN: So, what, is that 3 percent for you?

COHEN: And – and – I – I don’t – you know, I don’t get in the weeds quite like that, is it 2.5. I mean those are Fed watchers. But, you know, I think it comes down to, you know, there’s still a lot of under-employment in the country. And so it really comes down to if growth is too fast, then, you know, you start getting constraints on labor and wages go up and that may be a problem for but it’s hard to – we’re in one of these periods where I don’t think many people know exactly what’s going to happen.

SORKIN: Right. We keep talking on the broadcast about whether we’re in this sort of risk on/risk off situation. We look at the magnificent seven. We look at the Nasdaq. On the flip side we keep looking at Bitcoin. I don’t know, do you own – do you own any Bitcoin?

COHEN: I – I actually I own very little. I own – I own a little bit.

SORKIN: But you own a little bit.

COHEN: Yes, like really little.

SORKIN: Little. For what reason?

COHEN: Like – no, the only reason, my son is really into it.

SORKIN: Right.

COHEN: And so he’s – he had me like play around and try to figure out how to, like, you know, transact on Coinbase. So, I bought – I bought a little bit.

SORKIN: OK. Do you have – do you have a take on what’s going on with Bitcoin or if it – what it really represents?

COHEN: Yes. I don’t follow it that closely. It’s not kind of what I do. I mean, you know, there’s certainly an element of the population that believes in it. And maybe it’s the new gold. Hard to know, right? So – so, I – I don’t have a strong opinion on it.

SORKIN: Right. The reason I ask you about Bitcoin, though, is, to the extent that some people think that’s a hedge against, you know, inflation on – on one side.

COHEN: Right. Well, that’s the same thing as gold, right?

SORKIN: Well, that’s the question, is it, right?

COHEN: Or – well, you know, it’s a new instrument. I mean that’s the argument. We’ll see. I mean really hard to know. I think ultimately, I mean, Bitcoin is separate from crypto. I mean, but I think ultimately it’s about use case. You know, will crypto develop use cases? So, you know, Bitcoin’s interesting but it’s not – it’s just a piece of that whole ecosystem.

SORKIN: And then in terms of how you think about, I mean, we were talking earlier about the election. Do you think the election’s going to have a huge impact on the markets at this point?

COHEN: You know, I think a little bit. You know, obviously, if Trump comes in you can imagine, you know, perhaps tariffs. I mean that’s certainly possible. You know, he’s probably going to be perceived good for growth. But, you know, growth has been fine already. And if he comes in and it’s good for growth, in a – in a constrained labor environment, you know, that may stoke some inflation fears. It’s possible. But I don’t see that big a difference either way, you know.

SORKIN: Is that – inside the firm is there a house view about what that – how the election pans out? Or you –

COHEN: Well, we think today we probably would say Trump has an edge. But it’s so early, that, you know, it could change. I mean these things are volatile.

SORKIN: These things are very volatile.

COHEN: Yes. Yes. Yes.

SORKIN: Steve, we want to thank you for being here. It’s been – it’s been great to have this conversation.

COHEN: It was good – good to be here.

SORKIN: We hope to do this again in the future.

COHEN: OK. Sure. I’m available next week.

SORKIN: You’re available next week.

COHEN: Yes.

SORKIN: Well, we’ll hopefully see you next week.

COHEN: OK. All right.

SORKIN: Steve Cohen, thank you so much for joining us.

COHEN: All right. Thanks, Andrew.

SORKIN: Good luck with the season. And we’ll see where things go. And good luck with your golf this afternoon.

COHEN: OK.

SORKIN: And hopefully the weather will cooperate.

COHEN: All right.

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