Hedge Fund Ban Hasn't Stopped This Billionaire From Reaping Big Profits

Jul 30 2014 | 6:27am ET

Saijel Kishan (Bloomberg) -- Even after shutting down SAC Capital Advisors LP, Steven A. Cohen is still beating most hedge funds.

The billionaire, who started Point72 Asset Management LP to oversee his own wealth, has gained about 9 percent this year, according to two people with knowledge of the matter. Hedge funds on average have returned 2.5 percent this year through June, according to data compiled by Bloomberg.

The gains, close to $1 billion in absolute terms, equal more than half the record $1.8 billion his hedge fund paid to settle U.S. allegations of insider trading. While Cohen’s firm has shrunk to about 850 people from 1,000 in its transition to a family office, the 58-year-old is showing few signs of losing a competitive edge and has made a few key hires.

Cohen, who is worth about $11 billion, according to the Bloomberg Billionaires Index, had generated average annual returns of 30 percent, one of the best records in the hedge-fund industry, since he started SAC in 1992.

This year, he profited from investments including drugmaker Intercept Pharmaceuticals Inc., said the people, who asked not to be identified because the information is private. SAC made almost $370 million in two days in January from its stake in Intercept after the New York-based firm had a successful liver drug trial.

Cohen’s Hires

A spokesman for Stamford, Connecticut-based Point72 declined to comment. The firm manages between $9 billion and $10 billion.

Point72 told employees last week that it recruited Scott Braunstein from JPMorgan Chase & Co.’s asset management unit. Braunstein, the brother of the New York-based bank’s vice chairman and former chief financial officer Doug Braunstein, joins as a money manager.

Cohen’s firm said in April it hired Vincent Tortorella as chief surveillance officer, and in March said it would add Kimberlee Frasso as a compliance officer focusing on health care.

SAC returned about 20 percent last year through mid- December, a person briefed on the returns said at the time. Hedge funds climbed 7.4 percent in the year.

Eight former SAC money managers and analysts have pleaded guilty or been convicted of using confidential and material information to profit, while two have settled with federal regulators without admitting or denying wrongdoing.

SEC Proceeding

Cohen, who has denied wrongdoing, is the subject of an administrative proceeding by the U.S. Securities and Exchange Commission, which claims he failed to supervise employees to ensure they complied with securities laws. The proceeding was in May put on hold by a judge after prosecutors said criminal cases against former workers aren’t fully resolved.

Prosecutors had described SAC as “a veritable magnet for market cheaters” and said the U.S. had determined the hedge- fund firm had an insider-trading scheme that spanned more than a decade.

Cohen hasn’t let the government charges distract him from some of his passions. He attended Art Basel in Switzerland last month and with his wife, they were guests at a charity event in the Hamptons at the weekend.    

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

In Depth

Humble in Hofstra...One Debate an Election Can Make

Sep 26 2016 | 10:20am ET

Tonight's U.S. Presidential debate, infamously coined the “Humbling in Hofstra...


Quattrex Sports AG Debuts Soccer-Focused UCITS Fund

Sep 9 2016 | 9:54pm ET

Innovative alternative investment company Quattrex Sports has unveiled a new UCITS...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...