Unstructured Finance

Sotheby’s and a tale of two hedge fund managers

Hedge fund manager Steve Cohen’s reported plan to sell a number of valuable artworks may not only deliver a nice chunk of change for the Wall Street mogul, it may also provide gains for another rival manager.

Cohen is selling several high-profile artworks from his art collection, according to a story Monday in the New York Times, and he has given the task of selling the works to Sotheby’s – the 269-year-old auction house currently in the firing line of activist Daniel Loeb.

Loeb’s hedge fund owns 9.3 percent of Sotheby’s, making his New York-based Third Point the majority shareholder. Loeb wants the company to revamp and overhaul many of its operations and has demanded the resignation of the current CEO William Ruprecht. Sotheby’s has called Loeb’s actions “incendiary and baseless.”

Among other things one of Loeb’s major criticisms of the company is its approach to the contemporary and modern art market. In his early October missive to Ruprecht he wrote:

In particular, we are troubled by the Company’s chronically weak operating margins and deteriorating competitive position relative to Christie’s, as evidenced by each of the Contemporary and Modern art evening sales over the last several years.

For SAC employees, it’s not any given Thursday

By Katya Wachtel and Peter Rudegeair

At SAC Capital Advisors’ sprawling Stamford, Connecticut headquarters on Thursday morning,  security guards barred reporters from getting too close to the office building, holding them to an intersection a few hundred yards from the driveway.

A security guard said SAC had not added any extra security at 72 Cummings Point Rd today, when federal authorities charged Steve Cohen’s $15 billion hedge fund with wire and securities  fraud in connection with its long-running insider trading probe. But those who know the location  disagreed.

Grace DeVito, a portrait artist who lives around the corner from the Cummings Road office, said there was a “different feel” around the place today. She walked past the so-called campus with her two dogs and her daughter on Thursday morning and observed that two security guards were inspecting incoming cars to see if they had a sticker to park in the SAC parking lot. “Usually there’s no one out,” Grace said, referring to the guards.

SEC vs. SAC give rise to many legal theories

It seems everyone has their own pet theory about why the SEC chose now to move against hedge fund titan Steven A. Cohen after years of being part of the hunt along with the FBI and federal prosecutors.

Here are few of them that I got from talking to a number of legal eagles: including former prosecutors and regulators.

The most obvious one is that securities regulators, unlike federal prosecutors, are bumping up against  a pretty hard and fast five-year deadline for filing charges against Cohen and it was pretty much now or never. In pursuing a failure to supervise  charge against Cohen in an administrative proceeding, the Securities and Exchange Commission is gunning to put Cohen out of business without actually charging he has done any insider trading himself.

The new guy sitting at Steve Cohen’s side

By Matthew Goldstein

SAC Capital industrials trader Charles Simonian is getting a new job–one that’s very close to Steve Cohen.

The SAC Capital founder is moving Simonian onto his own small team of traders and analysts at the $14 billion firm, say sources. Simonian will work with Chandler Bocklage in overseeing trading in industrial sector stocks for the so-called Cohen Account–a portfolio that manages between $2 billion and $3 billion in gross exposure to the market. (Gross exposure includes the value of long and short positions).

The move comes as SAC Capital ended 2011 posting an 8 percent gain.

As previously reported on Reuters’ Unstructured Finance,  the top performer at Cohen’s fund was consumer products portfolio manager Gabriel Plotkin. His team of half-dozen traders and analysts manages about $1.2 billion of the firm’s money and has generated between $150 million and $200 million in trading profits.

SAC Capital: a look back in time

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.

The guy who is killing it at SAC Capital

By Matthew Goldstein

Move over Steve Cohen. The trader who is killing it at Cohen’s $14 billion SAC Capital Advisors this year is Gabriel Plotkin.

The portfolio manager, who specializes in consumer products and the gaming and lodging industry, is one of the top producers this year at Cohen’s hedge fund, say several people familiar with the Stamford, Conn. hedge fund. Plotkin, who joined SAC Capital in late 2006 from North Sound Capital, is emerging as on Cohen’s most reliable money men.

At SAC Capital, where most portfolio managers run books that range from as little as $250 million to $500 million, Plotkin manages one of the largest. His team of half-dozen traders and analysts manages about $1.2 billion of the firm’s money, say sources.

John Thaler’s JAT thaws some more in December

By Katya Wachtel

John Thaler’s hedge fund, JAT Capital, had a meteoric rise through much of 2011, generating a 38 percent return at its peak in early September.  Since then, Shumway Capital alum has ebbed, though he’s still beating a ton of his competitors.

Through December 16, JAT fell 1.2 percent, according to an investor.

The fund remains up 14 percent year-to-date though, and given the average hedge fund was down about 4.4 percent through November, JAT investors have something to smile about. Though they have less to smile about than they did a few months ago.

Others are grimacing, since many of the industry’s heavy-hitters have taken a beating this year. It’s no secret that stars like John Paulson,  Mark Kingdon and Lee Ainsle are sustaining double-digit losses. Through December 16,  Paulson’s Advantage Plus fund is down 52 percent year-to-date; Kingdon’s Offshore fund is down about 19 percent; and Ainslie’s Maverick Fund is off about 15 percent.

Steven Cohen in his own words

By Matthew Goldstein and Jennifer Ablan

The thing about deposition excerpts—even lengthy ones—is that some of the tantalizing material gets left on the cutting room floor. And that’s certainly the case with hedge fund billionaire Steve Cohen’s two-days worth of  testimony in the long-running Fairfax Financial litigation.

Now don’t get us wrong—there is plenty of great and illuminating stuff in the 242 pages of deposition testimony Reuters obtained through a court motion to unseal documents in the civil lawsuit. As we noted in our story, Cohen is pressed at great length for his views on insider trading—he thinks the laws are “vague”. And as we highlighted in our blog, there’s even an amusing little feud between the lawyers over how the SAC Capital founder should addressed.

Still, it makes you wonder what was said by Cohen in the more than 400 pages of deposition transcript that wasn’t unsealed. And we’d love to see Cohen on videotape as sometimes body language can be revealing.

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