Hedge fund firms with ties to Steven Cohen’s SAC Capital Advisors mostly made money in the second quarter.
However, for the first half of the year, their performance varied widely, with one posting a double-digit gain, while another is down by double digits. Half of the group is in the black, and half is losing money for the year.
Altogether, Alpha is tracking between eight and ten firms that we call the SAC Pack — firms headed by individuals who once worked for Cohen’s now-shuttered Greenwich, Connecticut-based SAC Capital.
Of eight firms for which we have 2016 performance data through June, the leader is one of the most obscure and smallest: Blue Anchor Capital Partners, founded by Vishal Ghiya, who worked for SAC’s Sigma Capital Management unit until 2014. Ghiya is also a Tiger Grandcub because he once worked for Tiger Cub Millgate Capital.
Blue Anchor is based in Summit, New Jersey, and manages only $13 million, although individuals familiar with the firm say it has turned down money because it wants investors willing to hang in for the long haul.
In any case, Blue Anchor was up 4.77 percent in the second quarter and 13.12 percent for the first half of the year. The firm was up another 3 percent or so in July and is now up 16.3 percent through the first seven months of the year.
Blue Anchor is known as a long-biased value investor. It entered the second quarter about 63 percent net long — it plans to run between 50 percent and 90 percent net long — with a total exposure of just 85 percent. At the end of the second quarter, the net long exposure was trimmed to 55 percent. We will be watching Blue Anchor closely as it grows.
Aside from the tiny Blue Anchor, the top SAC Pack performer this year is Kingdom Ridge Capital, co-founded in 2007 by Christopher Zepf. The White Plains, New York–based firm’s main fund — Kingdom Ridge Capital Master Fund — was up 4.8 percent in the second quarter and 8.8 percent for the first half of the year. In 2015 the long-short technology specialist was one of the top hedge fund firm performers, gaining 46 percent for the year.
At year-end Kingdom Ridge was managing $154 million. However, by the second quarter of 2016, it had $150 million in its U.S. equity portfolio, including the value of put and call options, according to regulatory filings. Altogether, its portfolio contains 14 names.
Semiconductor company Applied Micro Circuits Corp., Kingdom Ridge’s largest holding for the past few quarters, was roughly flat for the first half of the year. Cybersecurity specialist FireEye, Kingdom Ridge’s second-largest long — excluding options — was down 20 percent in the first half.
However, it appears the firm made a lot of money on a big bet in put options on Check Point Software Technologies that was established in the second quarter. The underlying shares of the IT security firm were down more than 8 percent in that three-month period.
Redwood City, California–based Dorsal Capital Management was up more than 2 percent in the second quarter, enabling it to move back into the black, and up 1.53 percent through June. Dorsal extended its gains in July and is now up 2.41 percent through the first seven months of the year.
Dorsal, which manages nearly $1.9 billion, according to a database that tracks the firm, was founded by former SAC technology experts Ryan Frick and Oliver Evans. It emphasizes long-short equity investing, concentrating on technology, media and consumer companies.
Dorsal had 23 U.S. stock longs at the end of June. Its largest positions were in telecommunications giant AT&T, online retailer Amazon.com and wireless infrastructure company American Tower Corp.
American Tower, Dorsal’s largest position at the end of the second quarter, was up more than 16 percent in the first half; AT&T — its fourth-largest position at the end of the first quarter — rose 25 percent; Amazon.com was up about 19 percent in the second quarter.
The worst performer among the SAC Pack continues to be Jason Karp’s Tourbillon Capital Partners, whose Tourbillon Global Master Fund previously posted three straight strong years. It was up a little less than 1 percent in the second quarter but was still down 15.3 percent through the second quarter after suffering a 16.1 percent loss in the first. It has continued to rally, gaining 3 percent in July and another 2 percent in the first half of August. So it is now down “just” 10 percent for the year.
In the first quarter Tourbillon, which manages $3.7 billion, was hammered by three longs: Dish Network, the satellite TV giant; drug company Pfizer; and American Homes 4 Rent, a real estate investment trust. In addition, Tourbillon lost money on its high-profile short of biotechnology company Mannkind Corp.
However, shares of Mannkind plummeted 28 percent in the second quarter and another 16 percent since then. The stock is now trading under $1 a share. Over the longer period, the Mannkind short is one of Tourbillon’s best calls.
Robert Pohly’s Samlyn Capital gained 2.16 percent in the second quarter despite an unprofitable June. This enabled the New York hedge fund firm to trim its loss for the year to 4.66 percent.
Pohly is a member of the SAC Pack and is a Tiger Cub. He was a portfolio manager at SAC’s Sigma Capital Management subsidiary from 2001 through 2006 and founded Samlyn in 2007 as a lift-out from Sigma. He also once worked as a financial services analyst for Julian Robertson Jr.’s Tiger Management.
In any case, at year-end Samlyn managed about $4.9 billion and specialized in financial, health care and industrial companies.
Shares of food service giant Aramark, Samlyn’s largest holding all year, is up a little less than 4 percent, while spirits company Constellation Brands, one of its largest positions, was up about 16 percent in the first half of the year. On the downside, shares of drugmaker Allergan, another significant long, dropped nearly 9 percent in the first half of the year.
Here is the performance of eight hedge fund firms with roots at SAC Capital for the first half of 2016.
Blue Anchor Capital Partners, up 13.12 percent
Kingdom Ridge Capital, up 8.87 percent
Dorsal Capital Management, up 1.53 percent
Hutchin Hill Capital, up 0.6 percent
Electron Global Fund, down 1.7 percent
Suvretta Capital Management, down 2.7 percent
Samlyn Capital, down 4.66 percent
Tourbillon Global Master Fund, down 15.3 percent
Source: Investors, individual firms.
