SAC Capital: a look back in time

December 28, 2011

By Matthew Goldstein

The full year numbers aren’t in, but it appears Steve Cohen’s SAC Capital had a pretty good year–especially compared to most other long/short equity hedge funds which lost money. But how does this year’s 8% gain stack-up against other strong years posted by the Stamford, Conn. hedge fund?

As we reported previously on UF, a good chunk of SAC Capital’s trading prowess in 2011 is being credited by sources to a single team led by Gabe Plotkin. His $1.2 billion book is one of the largest at SAC Capital and has generated between $150 million and $200 million in profits.

Indeed, only Cohen’s own 2 billion book–called the “big book,” the “Cohen account,” or simply “COHE”–is believed to manage more money at the $14 billion fund.

But SAC Capital’s projected 8% return got me thinking about 2007, another year when Cohen’s fund posted pretty good numbers even as some hedge funds (notably the Bear Stearns funds) either stumbled or crashed burned on the way to the start of the financial crisis.

A while ago, I got my hands on some old performance stats for SAC Capital’s long/short book for 2007. And while it’s hard to draw too many conclusions from the numbers, they do offer a glimpse into some of the muscle behind Cohen’s 900-employee trading empire.

In 2007, the firm recorded 251 trading days and during that period its long/short book had a gross market exposure of $34 billion. (GMV includes the total value of all long and short positions). In 2007, assets under management at SAC Capital ended the year at about $16 billion. So yes, the fund was generally operating under a higher leverage ratio than now.

But here’s the really important numbers. The firm, according to information reviewed by UF, posted a positive profit on 166 of those trading days, or 66 percent of the days that SAC Capital was open for business in 2007. And total P&L for 2007 was $2.89 billion. In 2007, SAC Capital was up around 15 percent on the year after fees–which at Cohen’s fund are nearly twice as high those charged by the average hedge fund manager.

Now P&L figures are hard to come by for SAC Capital, let alone any hedge fund. Yet the figure gives a baseline for thinking about this year’s performance,which is about half as good as 2007.

And it makes you wonder, if Plotkin is the current top performer and by a wide margin, just how well the other 90 or so portfolio managers at Cohen’s shop did in 2011.


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