 |
|
| Type | LLC, Private |
|---|---|
| Founded | 1992 |
| Founder(s) | Steven A. Cohen |
| Headquarters | Stamford, Connecticut, United States |
| Industry | Hedge Fund |
| AUM | $16 Billion |
| Owner(s) | Steven A. Cohen |
| Employees | 800 |
| Website | http://www.careers.sac.com/ |
SAC Capital Advisors (SAC Capital Partners, SAC Capital Management) is a $16 billion dollar group of hedge funds founded by Steven A. Cohen in 1992. The company is incorporated in Anguilla, British West Indies[1], and its trading offices are located in Stamford, Connecticut and New York City. SAC also maintains satellite offices in San Francisco, Hong Kong, Boston, and London.[2]
The firm has 800 employees, about 150 of which are investment professionals. The group manages $16 billion in assets across four independent portfolios, each with distinct mandates.[3] Although larger multistrategy funds exist, in absolute terms SAC's long-short strategies and capital flow make it an influential price-setting hedge fund in equities. The company has branched out into alternative investment strategies including private equity and emerging markets through expansion.
While most hedge funds charge a performance fee of 2% of AUM and 20% to 30% of the annual returns, SAC keeps 3% and 50%, the highest in the industry.[2] Favored industries for the fund include preeminently healthcare followed by high technology, industrials, and retail/consumer goods.
Forbes estimated SAC founder Steven Cohen's estimated net worth to be $8.0 billion as of 2008.[4]
Contents |
Investments
Former traders and rivals say one way he built his business and his relationships with brokers was by buying secondary offerings (when public companies decide to bring more shares to market) on which brokers receive around 40 cents to $2 a share on a built-in sales commission. "If you take down a million shares of a secondary, you've just paid your broker $1.5 million," says a fund manager. "That's how Stevie started off paying the Street."
According to BusinessWeek magazine, SAC Capital Advisors routinely accounts for as much as 3% of the New York Stock Exchange's average daily trading, plus up to 1% of the NASDAQ's – a total of at least 20 million shares a day. Average trading volume rivals Fidelity Investments and Capital Research and Management. The fund is widely known to pay brokers the highest commissions of any equities-focused investment group.[2] In addition to the firm's numerous short-term trades, SAC reportedly has a considerable longer-term stake in Google and search engine Baidu (controlling 19.5% as of 2006).[5][dated info]
Lawsuits and investigations
Biovail
In March 2006, 60 Minutes reported on a lawsuit against SAC and Camelback (now known as Gradient Analytics) by Biovail, a Canadian pharmaceutical company. According to the report, in the spring of 2003, SAC asked Camelback, an Arizona stock-analysis firm, for a report on Biovail. Former Camelback employees alleged that SAC had determined the content and timing of their reports on Biovail in order to drive the price of the stock down. Camelback said the former employees were lying and disgruntled and had been fired for poor performance and unethical conduct, and that it had already written a negative report on Biovail that pre-dated the alleged conspiracy. In the following six months Biovail’s stock fell 50 percent, however, the company issued two disappointing earnings statements. Biovail CEO Eugene Melnyk insists it was the Camelback reports that triggered the sell off.
The CBS report also noted that ten years previously Melnyk had sued another hedge fund, accusing it of spreading rumors about his stock in order to sell it short. SAC denied all the charges and said that the stock was overvalued and that the decline was due to earnings shortfalls and regulatory investigations.[6] In March, 2008, the U.S. Securities and Exchange Commission sued Biovail and some of its former officers, for accounting fraud, particularly that "Biovail actively misled investors and analysts about the reasons for the company's poor performance". Biovail settled for $10 million US. [7]
On February 19, 2009, Judge Stanley R. Chesler of the United States District Court for the District of New Jersey dismissed the claims of shareholders, writing: “… the factual allegations of the Amended Complaint have a tainted origin and, as events following its filing confirm, are incompatible with Biovail’s admission of guilt in a kickback scheme that the Amended Complaint accuses Defendants of falsely reporting and with Biovail’s admissions, in connection with the settlement of the SEC enforcement action, of making false statements that inflated its stock price.”
On August 20, 2009, New Jersey Superior Court Judge Donald Goldman dismissed all of Biovail's claims against SAC Capital. [8] The judge ruled that Biovail and its attorneys launched a choreographed strategy designed to constitute a counterattack against Biovail's stock action, and that its attorneys "ignored their professional and ethical obligations and aided Biovail for their own benefit."
Fairfax Financial Holdings
In July 2006, Steven Cohen's SAC Capital Advisors, Jim Chanos' Kynikos Associates, Dan Loeb's Third Point LLC, and former Morgan Keegan analyst John Gywnn were sued by Fairfax Financial Holdings Ltd (FFH) of conspiring to manipulate the share price of the company's stock price. FFH alleged SAC Capital and other two hedge funds paid John Gywnn and his employer Morgan Keegan to publish negative reports on FFH, while the funds shorted FFH's stock.[9] In December 2008, Fairfax Financial Holding provided evidence to the court of email exchanges among the hedge funds and the analyst, John Gywnn, discussing the content of the soon to published report on FFH.
2009 insider trading case
On November 7, 2009, the Wall Street Journal reported that, following a plea agreement with former SAC Capital employee and cooperating witness, Richard Choo Beng Lee, in a multi-year FBI hedge fund insider trading investigation, the U.S. Securities and Exchange Commission would examine certain trades made by Lee and others at SAC from 1999 to 2004 when Lee worked for the hedge fund.[10] No individual currently at the fund, nor SAC itself, have been accused of any wrongdoing,[11] and a five-year statute of limitations applies to insider trading charges.[12] Cohen was reportedly suspicious of the circumstances under which Lee's own hedge fund closed in March 2009 and refused to rehire him.[10][13]
References
- ^ Some Things I Suspect About Hedge Funds The Motley Fool. April 1, 2005. Retrieved 19 June, 2007
- ^ a b c The Most Powerful Trader on Wall Street You've Never Heard Of BusinessWeek. July 21, 2003. Retrieved 19 June, 2007.
- ^ [1] Source: SAC Capital Website.
- ^ http://www.forbes.com/lists/2008/54/400list08_Steven-Cohen_PZMO.html
- ^ http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BB198479B-2C86-48C9-92EE-437CEE1AACB6%7D&
- ^ Betting on a Fall, Lesley Stahl, 60 Minutes March 26, 2006. Retrieved 19 June 2007.
- ^ SEC Charges Biovail Corporation and Senior Executives With Accounting Fraud, U.S. Securities and Exchange Commission press release, March 24, 2008
- ^ http://www.nytimes.com/2009/08/21/business/21sac.html
- ^ http://www.bloomberg.com/apps/news?pid=20601087&sid=a1DyqLgTdy38
- ^ a b Pulliam, Susan (2009-11-07). "Hedge-Fund Giant Surfaces in Trading Probe". Wall Street Journal. http://online.wsj.com/article/SB125756405277235519.html?mod=WSJ_hpp_sections_tech. Retrieved 2009-11-07.
- ^ "Galleon Informant Traded Illegally While At SAC". FINalternatives. 11-5-2009. http://www.finalternatives.com/node/9594. Retrieved 2009-11-09.
- ^ Goldstein, Matthew (2009-11-05). "Trader pleading guilty also worked at SAC Capital (UPDATE 1)". Reuters. http://www.reuters.com/article/companyNewsAndPR/idUSN0513195420091105. Retrieved 2009-11-09.
- ^ Burton, Katherine; Saijel Kishan (11-09-2009). "Galleon Witness Lee Said to Have Sought Job With SAC Capital". Bloomberg News. http://www.bloomberg.com/apps/news?pid=20601103&sid=aqUVDRr07Vrs. Retrieved 2009-11-09.
External links
|
||||||||||||||||||||||||||||||||||||
This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)
