Reuters Investigates
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Steve Cohen and the law of big numbers
By Matthew Goldstein
All too often the bigger an investment fund gets, the more difficult it is to continue to generate blowout returns.
Maybe the best example of a fund getting so popular and ultimately unwieldy is Fidelity’s Magellan fund. One has to wonder if on a smaller scale, the same phenomena is happening to Steven Cohen’s SAC Capital Advisors.
As the below chart shows, Cohen’s now $13 billion hedge fund posted it most eye-popping performance numbers during its first decade of existence. Back then, SAC Capital had a fraction of the assets under management it has today and was considerably more nimble. It was back in those days when Cohen earned the reputation as the best trader of his generation.
However, more recently, as assets at SAC Capital have swelled, the returns churned out by Cohen & Co. have started to come back down earth. Overall, Cohen’s fund is still exceeding the industry standard. But the numbers SAC Capital is now putting up pale compared to Cohen’s track record.
