WSJ article on Steve Cohen and SAC Capital Mgmt

Bitstream · Sep 17, 2006

Quote from flytiger:

I thought, when the 60 minutes thing came out, SAC was paying top dollar to get the attention. Not sure where I read that. Help.

A lot of the traditional institutional biz is dead. it was a six cent model to four, now to one. The Institional guys are left to pitch platforms for one cent or get nothing. Nobody wants to pay for research. Go figure. Except, of course, guys like Rocker who are alleged not only to pay for it, but help write it and decide when to release it.

And I don't need you to agree with me. The cat's out of the bag. That fight is over. Now its just when.
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u have to admit tho the guy was/is extremely talented, achievin' extraordinary returns from the beginnin' when he was a nobody and surely without any priviledged insider info available to him. i agree that it is probable later in his career he had access to some kinda information advantage but still a fella to look up to, no 2ways about it imo.

flytiger · Sep 17, 2006

Byrne on the Radio Tonight, September 17, 8-10pm Eastern time.

It's a call in type show, so ask your questions. The stream is at KFYI.com. Here is the rest of the agenda.

WHAT I SUGGEST, IS ASK HIM ABOUT HIS OPINION OF THE STEVE COHEN ARTICLE. HE HAS SPENT TWO YEARS AND MILLIONS OF DOLLARS IN HIS INVESTIGATIONS, AND HE MIGHT GIVE YOU A VERY INTERESTING ANSWER.

Program: The Terry Gilberg Show, KFYI-AM, Phoenix

Date: Sunday, September 17

The show starts at 5:00 p.m. Local Time.

The first hour will tentatively be about Taser

The second hour (6pm) will be all Patrick

Host: Terry Gilberg

Format: Live talk radio show

Topic: Naked short selling; Gradient lawsuit; Overstock; Taser

Duration: 1 or 2 hours (depending on whether Patrick is on the first hour)

Finishes up at 7pm

MogulB · Sep 17, 2006

Does anyone else have any pictures of the SAC trading floor or a close up of Steve's in that picture. I find it interesting to see.

Quote from OneHipCat:

The Hedge-Fund King Is Getting Nervous

Inside billionaire Steven Cohen's hidden world
of massive trading and lavish art. Is the party over?

At home with Van Gogh, Gauguin and a skating rink

By SUSAN PULLIAM
September 16, 2006; Page A1

STAMFORD, Conn. -- It was the kind of day that can give a hedge-fund tycoon nightmares. As stocks fell on the afternoon of June 12, the largest holdings of Steven Cohen's more than $10 billion hedge fund were falling even harder.

Mr. Cohen, whose trading acumen, monumental compensation and sprawling art-laden home had made him a trailblazing star of the hedge-fund boom, watched the carnage unfold on eight computer screens arrayed around his desk. From time to time, he leaned back and rubbed his face. "Oh, boy," he said to himself.

The 20,000-square-foot trading room at SAC Capital Advisors, chilled to 70 degrees to keep traders alert, was hushed. Mr. Cohen, who sits at its center, likes it that way. Phones blink rather than ring. Computer hard drives had been moved off the trading floor to eliminate hum. Rows of traders wearing SAC fleece jackets watched Mr. Cohen nervously, waiting for an order to sell shares.

But Mr. Cohen wasn't budging. Less than an hour before the stock markets closed, Mr. Cohen, biting his nails, compared his sinking stocks to a plunging department-store elevator. "There goes ladies lingerie," he said, to no one in particular. By day's end, his firm had lost $150 million, or 1.5% of its assets -- one of its worst one-day showings ever.

In years past, Mr. Cohen might have sold frantically as the market fell. He had achieved celebrity status in the hedge-fund world, overshadowing such influential managers as George Soros and Julian Robertson Jr., with a hair-trigger approach to trading that was extraordinarily profitable. When stocks appeared to be mispriced, Mr. Cohen would pounce, then he would bail out as soon as they ticked in the right direction. His success had inspired a generation of scrappy Wall Streeters -- some of them with no experience whatsoever handling other people's money -- to open their own hedge funds.

That quick-trading game is now over, says Mr. Cohen. With about 7,000 hedge funds competing for investment ideas, good stock investments are getting more scarce. "It's hard to find ideas that aren't picked over, and harder to get real returns and differentiate yourself," he says. "We're entering a new environment. The days of big returns are gone."

To make matters worse, the stock market, he says, is no longer as forgiving for investors. The tailwind of low interest rates, low inflation and strong corporate profits, he says, has been lost. There are no more easy pickings, he says.

SAC is among the most widely watched investment firms in the world. Mr. Cohen, who is 50 years old, has always guarded his privacy fiercely, keeping mum as attention was heaped upon his trading tactics, his voracious art collecting, and his expanding Greenwich, Conn., estate. Recently, in a series of interviews at his Stamford office, Mr. Cohen discussed the rise of SAC Capital, the suspicions of improper trading that have dogged his firm, and the big shift in his view of investing.

Mr. Cohen says he is now making bigger bets and holding the stocks longer. The throng of rival hedge funds could create a dangerous logjam, he says. Mr. Cohen worries that some of his largest holdings are also favored by other hedge funds. A rush for the exit could spell trouble. He says he expects that eventually there will be a sudden and sharp reversal in the stock market -- but he's not worried about that happening this year. "There will be a real decline that may devastate hedge funds that have crowded into the same stocks," he predicts.

"Hedge funds are bigger than they used to be. Their positions are bigger," he says. "I worry that if everyone were to sell, could we get out?"

Hedge funds, private investment pools for institutions and well-heeled individuals, now hold about $1.2 trillion in assets, more than twice what they had five years ago. Fat returns are becoming more elusive. In 2005, the average hedge fund returned 9.3%, below the 11.4% average for the past decade, according to Hedge Fund Research Inc., a Chicago consultant. By comparison, the S&P 500 index returned 7.7% last year. A record 848 hedge funds closed up shop in 2005, many of them hobbled by poor performance, according to Hedge Fund Research.

Mr. Cohen's reputation rests on an investing style altogether different from the buy-and-hold strategy espoused by influential investors such as Warren Buffett. Mr. Cohen believes that by scrutinizing trading patterns of a stock -- by "watching the tape" -- it is often possible to predict how the stock will move in the coming hours or even days. For years, he jumped in and out of stocks -- sometimes without any knowledge of a company's fundamentals, or even what it did. It was akin to picking out rocks in a river by watching the currents swirl around them.

Classic "value" investors such as Mr. Buffett insist that what other traders are thinking and doing is of no consequence to sound investing. Mr. Cohen is his polar opposite. He spends long days at the office in black jeans and worn sweaters, glued to his computer screens as he personally trades upwards of 300 stocks. SAC's trading floor bombards him with information about what's going on in the market. He soaks it all up. His eyes are often rimmed with fatigue.

On a typical day, SAC's trading accounts for 2% of overall stock-market activity. SAC pays securities firms an average of one cent for each share it trades, which adds up to more than $400 million in trading commissions each year, making SAC one of Wall Street's best clients.

For years, the relentless trading was highly effective. SAC Capital Management LP, Mr. Cohen's largest and oldest fund, launched in 1992, has generated an average annual return to investors of 43.5%, after he takes a sizable cut of profits. He and his partners keep 50% of that fund's gains, along with a 3% annual fee, far more than the 20% and 2% charged by most managers.

Mr. Cohen's colossal compensation inspired cocky traders who figured they could do the same, and dismayed others who disdained the frenetic momentum-style investing that underpinned the bull market of the 1990s. His net worth is estimated at about $3 billion, which SAC does not dispute.

In 1998, Mr. Cohen and his second wife, Alex, 42, bought his gated 1920s fieldstone estate for $14.8 million. They added a 12,000-square-foot annex with a basketball court and an indoor pool, and an outdoor skating rink. They constructed a 20-seat movie theater and decorated the ceiling of its lobby with the pattern of stars on their wedding night 16 years ago. Outside, they laid out a two-hole golf course, formal gardens and an organic vegetable plot.

They bought $700 million of art and adorned the estate with some of the pieces. A Keith Haring sculpture of three painted aluminum dancing figures stands out front. A $52 million Jackson Pollock hangs in the library. A Van Gogh and a Gauguin, both bought recently for a total of $100 million, grace the living room. An Andy Warhol and a Roy Lichtenstein hang in the foyer.

The spending spree fueled carping that new hedge-fund wealth was altering the fabric of Greenwich, long a home for the very rich. Mr. Cohen's inclination to keep to himself caused people to brand him a recluse.

Mr. Cohen, a self-described cynic, is given to self-deprecating humor. He describes himself as a regular guy who just wants to be left alone. He says he likes to eat grilled-chicken sandwiches at Top Dog, a local hot-dog stand, and to kick back at night in front of reality television shows. "I'm not reclusive," he says. "I'm out and about. I have seven kids. That takes time...I'm not an introvert. I'm media shy. They turn what should be an admirable trait into something bad."

His wife Alex, who says she and her husband worry constantly about the safety of their children, shrugs off criticism of the house. "I don't need a house this big," she admits. "But you know what? Why not? I'd rather my kids have a playground here."
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BCE · Sep 17, 2006

Here's a Business Week article on Steve Cohen from a few years ago http://www.businessweek.com/magazine/content/03_29/b3842001_mz001.htm

Grob109 · Sep 18, 2006

Quote from easyguru:

Lets see what does it say:

1 A great trader has burnt out.

2 Due to other things in his life he has lost motivation.

3 He has already made enough money. Does not need to trade for it anymore.

Rest is all rationalization/ marketing or lowering of investors expectations.. It has nothing to do with more hedge funds or markets.

Read biography of every great trader. It always ends with how the great time are over now and next generation of speculators will not be able to profit in the same way.

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He certainly knew that the reporter didn't know anything about the markets and how to make money.

Joab · Sep 18, 2006

Great article thanks for sharing !!!

Go Stevie .......

I have never been the groupie fan type ever in my life but man would I like to meet Stevie and talk shop with him for a few hours or even better to work for him (I happily do it for free)

I completely RESPECT and ADMIRE this man.

I understand he is a great philanthropist too.

mschey · Sep 18, 2006

Quote from Joab:

Great article thanks for sharing !!!

Go Stevie .......

I have never been the groupie fan type ever in my life but man would I like to meet Stevie and talk shop with him for a few hours or even better to work for him (I happily do it for free)

I completely RESPECT and ADMIRE this man.

I understand he is a great philanthropist too.
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He probably pays 10% in taxes...we would all be great philanthropists if we had that deal.

SWScapital · Sep 18, 2006

frozen sculpture of the artists head...made from his own blood...ummm yah....

Of course SAC gets props all over the place. However I disagree with the days of large returns being over. The quick and nimble small time trader(<5million) can still get involved in names that SAC types cannot. Volume issues and the like.

MogulB · Sep 18, 2006

True, and that is why SAC moved on, due to their size. This is the normal trajectory of funds that do wel and amas size over time. SAC has no other choice.

ang_99 · Sep 18, 2006

Looks like he's going to be on CNBC at 4:30. Weird that he's doing all this press all of a sudden.