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

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR