Breaking News from CNBC's Kate Kelly: SAC Capital Suffers $1.68 Billion in First Quarter Redemptions
When: Today, Friday, February 15th
Following is breaking news from CNBC's Kate Kelly today, Friday, February 15th on "Fast Money Halftime Report."
KATE KELLY: WELCOME BACK TO FAST MONEY HALFTIME REPORT, I'M KATE KELLY WITH SOME BREAKING NEWS ON THE EMBATTLED HEDGE FUND SAC CAPITAL. IT HAD A REDEMPTION DEADLINE FOR FIRST QUARTER YESTERDAY AND THEY ARE SET TO LOSE ABOUT $1.6 BILLION IN INVESTOR CAPITAL BY THE END OF THE YEAR. THAT'S GOT TO BE A BIT OF A BLOW TO SAC, WHICH HAD TOLD PEOPLE TO EXPECT IN THE NEIGHBORHOOD OF A BILLION DOLLARS IN REDEMPTIONS THAT'S A BILLION OUT OF WHAT IS NOW A TOTAL OF 15 BILLION, NINE OF WHICH BELONGS TO FOUNDER STEVE COHEN AND OTHER INSIDERS. BUT IN THIS CASE INVESTORS YESTERDAY VOTED TO REMOVE ABOUT 1.7 BILLION OUT OF THE SIX OR SEVEN IN OUTSIDE CAPITAL THAT THEY NOW HAVE. THAT MONEY WILL COME OUT OVER THE COURSE OF THE YEAR. IMMEDIATELY SPEAKING ABOUT 660 MILLION WILL BE RETURNED TO INVESTORS DURING THIS FIRST QUARTER THE BALANCE OF ABOUT A BILLION WILL BE BY THE END OF 2013. SAC IN RESPONSE TO SOME INVESTOR CONCERNS RELAXED THEIR LIQUIDITY RULES GOVERNING HOW MUCH MONEY YOU CAN GET BACK AND WHEN. TYPICALLY IT TAKES FOUR QUARTERS WITH A QUARTER OF THE MONEY PER QUARTER TO GET THE MONEY BACK OVER A COURSE OF TWELVE MONTHS. NOW SOME INVESTORS ARE TAKING ADVANTAGE OF AN OPPORTUNITY TO STAY WITH THEM FOR ANOTHER QUARTER AND STILL GET ALL OF THEIR MONEY BACK IN THIRDS BY THE END OF THE YEAR. NOW A COUPLE OF FACTORS PEOPLE SHOULD KNOW ABOUT, SAC HAS BEEN DOING PRETTY WELL SO FAR THIS YEAR, THEY WERE UP 2.5% NET OF FEES FOR JANUARY. THEY ARE IN THE BLACK I AM TOLD SO FAR FOR FEBRUARY. IF THEY CONTINUE A PACE IN TERMS OF THEIR PERFORMANCE IN RECENT YEARS, WHICH HAS BEEN BRISK, LAST YEAR GROSS OF FEES THEY WERE MAKING ABOUT $270 MILLION PER MONTH, THEY SHOULD BE ABLE TO MAKE UP FOR THESE OUTFLOWS. THE OTHER THING THAT'S GOING ON IS THAT STEVE COHEN AND SOME OTHER INSIDERS HAVE BEEN ADDING SMALL BITS OF CAPITAL THROUGH THE COURSE OF THE FIRST QUARTER AND I'M TOLD SCOTT THAT WILL CONTINUE IN THE COMING QUARTER OR TWO AS INSIDERS AND SOME SELECT OTHER INVESTORS DECIDE TO ADD MONEY TO SAC CAPITAL. SO SOME COUNTERVAILING FACTORS AS WELL.
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