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

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...