SAC Won't Speed Redemptions

Aug 16 2013 | 11:03am ET

SAC Capital Advisors will not accelerate the return of money to exiting investors, in spite of calls from some clients that it do so.

The Stamford, Conn.-based hedge fund, which has been indicted for insider-trading, expects the handful of outside investors who have not already filed withdrawal notices to do so today, its latest redemption deadline. But it said it will pay those redemptions—and the roughly $5 billion in redemptions it has already received this year—over the next few months and not sooner, Bloomberg News reports.

Some SAC clients had asked the firm to speed up those payouts, fearing that SAC's assets might be frozen as the case against it proceeds. Prosecutors have said they have no intention of seeking to shut SAC down until after a trial—SAC has pleaded not guilty to the fraud charges—and have reached an agreement with the hedge fund allowing it to operate while fighting those charges.

SAC relaxed its redemption terms earlier this year in an effort to stave off mass redemptions. The firm, which usually requires investors to wait a full year to get all of their money back, told investors that they could fully redeem by the end of this year no matter when they filed their withdrawal requests. That means that investors who file requests today will still get their money back in December.

SAC began 2013 with $15 billion, but expects to have only $9 billion—almost all of its belonging to firm founder Steven Cohen and employees—at the end of the year.

Part of SAC's reluctance to pay out early may have to do with its effort to convince its roughly 1,000 employees that it will continue to operate normally.

"SAC is under no obligation to be more generous than the terms it negotiated with investors," Sadis & Goldberg's Ron Geffner told Bloomberg. "For Cohen to return assets would be inconsistent with his message that it's business as usual."

SAC's portfolio remains liquid, with only four positions worth more than $200 million at the end of the second quarter, according to regulatory filings. It's also smaller: The firm reduced its U.S. stock holdings by about $2 billion in the second quarter, to $16.2 billion.

SAC's largest holdings at Micron Technology and veterinary pharmaceutical company Zoetis Inc. The firm cut back on its holdings in EQT Corp., Sirius XM Radio, Michael Kors Holdings and Starbucks Corp.


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