Mon, Oct 23, 2017
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. Regulatory - David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge, Carried interest tax: How much does it matter?, Odey sees 'terrifying' mix in MiFID, tapering, asset values, Hedge funds come together to share cost of MiFID and research, SEC turns up the heat on U.S. investment advisers, India's Sebi asks hedge funds to report investments in commodity derivatives[more]

    David Stockman: Trump tax reform overhaul is a pipe dream, stocks are heading for 40-70% plunge From CNBC.com: David Stockman is warning about the Trump administration's tax overhaul plan, Federal Reserve policy, saying they could play into a severe stock market sell-off. Stockman, the R

  2. North America - Puerto Rico rejects loan offers, accusing hedge funds of trying to profit off hurricanes[more]

    From TheIintercept.com: Puerto Rico has rejected a bondholder group's offer to issue the territory additional debt as a response to the devastation of Hurricane Maria. Officials with Puerto Rico's Fiscal Agency and Financial Advisory Authority said the offer was "not viable" and would harm the islan

  3. Investing - WPP targeted by short-selling American hedge fund, Sun co-founder sells secretive hedge fund on big chip trade[more]

    WPP targeted by short-selling American hedge fund From Cityam.com: An American hedge fund has mounted a bet against WPP, the world's largest advertising group, with a trade worth almost £90m. Lone Pine Capital has built a short position worth 0.51 per cent of the FTSE 100 company,

  4. Hedge funds up as industry adjusts to rising rates[more]

    Komfie Manalo, Opalesque Asia: Hedge funds have reshuffled their portfolio after nearly four weeks of rising rates as the Lyxor Hedge Fund Index was up +0.2% from 19 September to 26 (+1.1% YTD), fuelled by strong results of global macro funds, Lyxor Ass

  5. Manager Profile - How the world's hedge fund king used 'idea meritocracy' to become a billionaire[more]

    From Forbes.com: In 1982, Ray Dalio made what he calls the biggest mistake of his life. He made a bet that there would be an economic collapse stemming from a debt crisis. And he was wrong. He lost money. He lost his client's money. He had to let people go from his firm and borrow money from his dad