SAC Capital Advisors
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| Type | LLC, Private |
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| 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 multi-strategy, multi-discipline 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 dedicated 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 unleveraged[citation needed] assets across four independent portfolios, each with distinct mandates.[3] SAC is commonly regarded as the best trading house in the world. Although larger multistrategy funds exist, in absolute terms, SAC's devotion to pure long-short strategies and aggressive capital flow make it the most influential price-setting hedge fund in equities. However, the company has recently branched out into other alternative investment strategies including private equity and emerging markets through significant expansion.
While most hedge funds charge a performance fee of 2% of AUM and 20% to 30% of the annual returns, SAC is legendary for keeping 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.
According to Forbes, as of 9/17/08, SAC founder Steven Cohen's estimated net worth is $8.0 billion.[4]
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[edit] Investments
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 & Management. Moreover, the fund is widely known to pay brokers the highest commissions of any equities-focused investment group.[2] In addition, SAC reportedly has a considerable stake in : Life Technologies, P&G, Google, AMAG Pharmaceuticals, California solar power firms [2] [3], Cypress Semiconductor Corporation [4], AC Moore, Greenbrier Companies [5], Marinemax Inc. [6], Bally Total Fitness [7], New Frontier Media [8], Progen Industries [9], retailer Casual Male[5], pharmaceutical company Impax Laboratories [10], Phelps Dodge [11], supermarket chain Pathmark Stores [12], and Penwest Pharmaceuticals [13]. The hedge fund also controls 19.5% of search engine Baidu [14]. One of its new investments in 2006 was a stake in Tyco International [15]. Its newest investments are Avanex. [16] SAC is now dabbling in private equity. [6]
[edit] Biovail lawsuit
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. 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.
Camelback responded by saying it had already written a negative report on Biovail that pre-dated the alleged conspiracy and said "everything in our reports was true; we and no one else wrote those reports; "nothing we did was illegal." The 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. Camelback said the former employees were lying and disgruntled and had been fired for poor performance and unethical conduct. SAC denied all the charges and said that the stock was overvalued and that the decline was due to earnings shortfalls and regulatory investigations.[7]
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. [8]
[edit] The Volkswagen Major Short Squeeze
In October 2008 the Volkswagen short squeeze dubbed "The Short Squeeze of the Century" started when Porsche announced it had accumulated control of over 70% of Volkswagen share. A domino effect ensured by short sellers to run to the exit to cover. SAC Capital and many other hedge funds were caught in this major short squeeze.
[edit] Fairfax Financial Holding lawsuit
In July 2006, Steven Cohen's SAC Capital Advisors, Jim Chanos' Kynikos Associates, Dan Loeb's Third Point LLC, and John Gywnn, former Morgan Keegan analyst 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. At the same time the hedge funds short sells the shares of FFH. 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.
[edit] References
9. Chanos Saw Nonpublic Fairfax Research, E-Mails Show, Bloomberg. Feb 13, 2009
- ^ 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
- ^ "SAC Capital Discloses 6.2% Stake in Casual Male (CMRG)". StreetInsider.com. November 27, 2006. http://www.streetinsider.com/13Gs/SAC+Capital+Discloses+6.2%25+Stake+in+Casual+Male+(CMRG)/1381571.html. Retrieved on 2007-12-17.
- ^ Goldstein, Matthew (2007 January 29). "Shift for SAC's Cohen". thestreet.com. http://www.thestreet.com/newsanalysis/wallstreet/10335463.html. Retrieved on 2007-02-10.
- ^ 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
[edit] External links
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