Criminal and civil charges notwithstanding, redemption day can be intimidating. After hemorrhaging outside investor cash of $1.7 billion in the first quarter and nearly $3 billion in the second quarter, SAC Capital Advisors is bracing for a flurry of notices from investors requesting the return of the last of the capital invested by outside clients, estimated to come in at around $1 billion.
While the Stamford, Connecticut, hedge fund officially declined to comment, traders and employees at the fund have refrained so far from following in the footsteps of their clients, largely keeping their capital invested in the firm. A longtime portfolio manager at the fund remarked, “We still have $9 billion to $10 billion of permanent capital from employees who aren’t going anywhere and Stevie [Steven Cohen, the head of the fund] and we’re open for business. My capital is not shrinking — in fact, it has only increased.”
Friday’s redemption represents the first quarterly window to open up since the U.S. attorney for the Southern District of New York, Preet Bharara, announced in late July the filing of insider trading, wire-fraud and money-laundering charges against the firm, alleging that SAC’s insider-trading was “rampant” and “without any known precedent in the history of hedge funds.” With Bharara making clear he is targeting the forfeiture of hundreds of millions of funds from SAC, today is outside clients’ last chance to call in redemptions before at least November — at which point the fund’s capital could be subject to the outcome of legal proceedings.
“This round of redemptions is going to be smaller than the others, because there’s not much outside money left,” says an executive at a competing hedge fund in New York. “There may be a few people who want to keep their money in there because they’re crazy, they want to be contrarian or they’re friends with Stevie, but I think this is the last of outside clients right now for this fund.”
Steven Cohen Preet Bharara Stamford SAC Capital Advisors Connecticut
