SAC Vet Karp Posts Big Q3 Gain

Jan 2 2014 | 12:32pm ET

As SAC Capital Advisors fades into its family-office future, one of the firm's former traders is staking a claim to its share of the legendary hedge fund's legacy.

Jason Karp's Tourbillon Capital soared 15% in the third quarter, according to ValueWalk. That's not far off SAC's return for the full year, of about 20%.

Karp launched the $350 million fund in January after a stint as co-chief investment officer of Carlson Capital. Karp was previously a trader and research director at SAC's CR Intrinsic Investors.

Karp's success in the third quarter was due primarily to his short bet against retailer J.C. Penney Co. Penney's shares dropped 47% in the third quarter, which saw its largest investor, Pershing Square Capital Management, dump its entire stake at a $500 million loss. Pershing Square chief William Ackman also resigned from Penney's board following a dispute with its chairman and interim CEO.

In a letter to investors, Tourbillon wrote that Ackman's exit was not due to a bout of frustration but to his fears that Penney's could fall further—an analysis Karp shares.

Tourbillon did suffer some losses on shorts in the third quarter, notably those on food staples names. But the firm said it was sticking with the bets, believing that the stocks are overvalued.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...