How SAC Capital Works Now
The secretive hedge fund group SAC Capital has recently changed the way it operates.
For most of its history, SAC's traders have been directly overseen by Steven A. Cohen, the group's founder and chief executive.
But recently Cohen decided that personally overseeing hundreds of portfolio managers was not practical. So he has organized his portfolio mangers by sectors and appointed division bosses to oversee groups of portfolio managers.
But these sector bosses are not just managers of people—they also manage portfolios for the fund. They run portfolios based on the best ideas of the managers who operate under them.
Unlike many large hedge funds, SAC Capital is not dominated by one manager or idea. Cohen himself only oversees about 10 percent of the assets under management. Instead, SAC has many managers each pursuing their own trading strategies independently.
"We keep score with simple stats, like baseball," Cohen said in an interview with SkyBridge partner Anthony Scaramucci at the SALT conference in Las Vegas.
He explained that portfolio managers are judged on two basic measures.
First, their win/loss percentage: how many of their trades work make money and how many lose money. Second, the relative sizes of their wins and losses.
"You obviously want your winning trades to make more money than your losing trades lose," Cohen said.
Questions? Comments? Email us atNetNet@cnbc.com
Follow John on Twitter @ twitter.com/Carney
Follow NetNet on Twitter @ twitter.com/CNBCnetnet
Facebook us @ www.facebook.com/NetNetCNBC