SAC Capital Grows Fund as Legal Battles Mount
It’s been a tough couple of weeks for SAC Capital Advisors, the infamous Greenwich hedge fund.
Shortly after the firm appeared to have dodged a federal criminal investigation into insider trading, news surfaced that a top Senate Republican had launched an inquiry into how the Securities and Exchange Commission handled past concerns about suspicious trading at the firm.
Days later, word circulated that the SEC itself is probing whether SAC traded improperly in health care companies in recent years.
Despite all the drama, SAC’s performance is roaring, boosting asset levels in the process. Year to date, the firm’s flagship fund is up 9 percent through the end of May, according to investors—beating out the stock markets and leaving most other long-short equity managers, who are down 7 percent on average, in the dust.
SAC started this year with total assets of roughly $12 billion, according to people familiar with the matter, and since then the number has grown to its current level of nearly $14 billion. Part of that is performance, and part of that is new contributions that firm founder Steve Cohen has made to the fund, these people add.
But at the same time, some investors have withdrawn money from SAC this year, perhaps cowed by the legal issues swirling around the firm. All in, net inflows are about neutral, say two people familiar with the matter.
So far, SAC and its well-known founder appear to have escaped federal criminal charges as part of the Manhattan U.S. Attorney’s broad insider-trading case, despite the fact that two former SAC traders pled guilty to using inside information to make profitable trades for the firm.
SAC has said it is cooperating with all government inquiries.
Internally, SAC has handled the public scrutiny by making its general counsel and other senior managers available to answer investor questions, say people who have money in the firm. And in another apparent sign of strength, SAC has told investors it intends to close its flagship fund to new investors in the coming months, according to people familiar with the matter.
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