Sat, Apr 30, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund SAC under scrutiny as news breaks of the first investigation-driven redemption

Tuesday, May 31, 2011

Steve Cohen
From Kirsten Bischoff, Opalesque New York:

The reality is a multi-billion dollar mega fund such as Steve Cohen’s SAC Capital is going to see a certain level of inflows and outflows during the course of any given year, so news of a single redemption would not normally hit the wires with the speed at which it did on Tuesday. However, Institutional Investor, has apparently identified one SAC investor who recently submitted a redemption request and broke the story that this particular redemption is driven by the fact that Steve Cohen and his firm have become Moby Dick to the SEC’s Ahab.

While the redeeming investor pointed out to the publication that SAC has a world-class compliance department, they did say, “We don’t want to be fickle,” says the manager. “We hate doing this. But, the government seems so intent now in getting them and there are additional SAC-related characters tainted. Some dealt with the same stocks at SAC.” Of course, one also has to try and determine the motives for that investor (who the publication termed as "well-known") for speaking with the press about the redemption.

SAC, has not as a firm (nor has Steve Cohen) been charged of any wrongdoings by the US regulatory agency, but it is clear that after two former employees were linked to the most recent Wall Street insider trading investigation, SEC investigators are working hard to connect the rest of the firm to that type of activity.

According to reports, SAC is up approximately 8% (through the end of last month), and has grown through inflows by $1.5bn over the past year. As pointed out by Fortune magazine, Cohen and his employees are the investors behind almost half the asset base, so there is a certain amount of built in stability should the fund face further future redemptions driven by investor-worries over the attentions of the SEC.

The apparently epic hunt unfolding by the SEC should make SAC the summer story to watch, and it will be interesting to keep an eye out for how the word “redemption” is used in this story going forward. Will it be used only to define further formal requests to return assets to investors? Or to describe the continued outperformance by the firm’s portfolio teams?

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Hedge funds see $14.3bn outflows in Q1, CTAs and multi-strategy lead net inflows[more]

    Komfie Manalo, Opalesque Asia: The hedge fund industry saw net outflows of investor capital in the first quarter of the year, totaling $14.3bn, data from Preqin showed. This continues from the $8.9bn overall net outflows that funds recorded in Q4

  2. Third Point calls Q1 "catastrophic" for hedge funds[more]

    Bailey McCann, Opalesque New York: The first quarter of this year was rocky for hedge funds based on aggregate performance from the industry, but now we are beginning to hear what the managers thought of it as quarterly letters make their way to investors. Dan Loeb, CEO of New York-based $17 bill

  3. Asia - Stabilization of China's capital outflows may hinge on Janet Yellen, Fink says China to do well this year as bubble threat postponed, Chinese hedge fund to invest in India’s infrastructure[more]

    Stabilization of China's capital outflows may hinge on Janet Yellen From Bloomberg.com: Whether China’s recent stabilization of its currency and capital outflows continues -- or downside pressure reignites -- may hinge in large part on Janet Yellen. If the Federal Reserve chair sticks to

  4. …And Finally - After all, judges are human too[more]

    From Newsoftheweird.com: In March, one District of Columbia government administrative law judge was charged with misdemeanor assault on another. Judge Sharon Goodie said she wanted to give Judge Joan Davenport some files, but Davenport, in her office, would not answer the door. Goodie said once the

  5. Comment - Unmasking the men behind Zero Hedge, Wall Street's renegade blog[more]

    From Bloomberg.com: Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.) After more than a year writing for the financial website Zero Hedge under the n