BOSTON/NEW YORK (Reuters) - Hedge fund titan Steven A. Cohen’s SAC Capital Advisors has gained about 4 percent this year, beating the industry average at a time the $15 billion fund is still very much in federal investigators’ crosshairs.
An investor with the Stamford, Connecticut-based fund said the firm’s flagship portfolio had risen about 4 percent through early March. Another person familiar with SAC Capital’s performance confirmed the 4 percent figure.
While SAC Capital is beating the average hedge fund return of 3.22 percent this year, the firm that specializes in stock trading is lagging behind the 9.11 percent gain in the Standard & Poor’s 500 Index. Over SAC Capital’s 20-year life, the fund has returned an average 25 percent a year; it often does best when markets are falling.
As of the end of February, SAC Capital was up 3.4 percent for the year after taking out fees, said a person familiar with the firm. SAC Capital, which does not publicly release its performance figures, charges some of the highest fees in the hedge fund industry.
For SAC Capital, the better than average performance comes at a time Cohen has been dealing with the fallout from a long-running investigation into allegations of insider trading at the firm that has led to the firm paying one of the largest penalties on record to the U.S. Securities and Exchange Commission.
On Friday, SAC Capital agreed to pay $616 million to settle civil fraud charges of trading in four stocks with the help of illegally obtained information, in what regulators called the largest-ever insider trading settlement.
But both the government and the firm have warned that the investigation is not over yet and more charges could be filed. Federal investigators are also examining other allegations of improper trading by SAC Capital in shares of Weight Watchers International Inc (WTW.N) and InterMune IncITMN.O, Reuters reported in December.
Prosecutors also are nearing a decision on whether to pursue criminal charges against Michael Steinberg, a longtime portfolio manager at SAC who was suspended from his post in October last year. Steinberg has not been charged with a crime but was named as an unindicted co-conspirator in a criminal prosecution of two convicted hedge fund traders who had traded Dell DELL.O shares.
Steinberg, one of Cohen’s longest tenured traders and whose wedding the SAC founder attended, has been moving between several hotels in New York City in recent weeks, according to people familiar with the situation. In the event he is indicted, Steinberg wants to avoid being arrested at his Upper East Side home where he lives with his wife and two children, the people said.
Steinberg’s hotel stays were first reported by the New York Post.
Barry Berke, a lawyer for Steinberg, has said his client “did absolutely nothing wrong.”
To date, nine former employees of SAC Capital have been either charged or implicated with wrongful trading while working at the hedge fund. The firm employs about 900 people.
Cohen, one of the most successful managers in the $2.25 trillion hedge fund industry, with a reported net worth of $9.3 billion, has not been charged or accused of any wrongdoing.
Reporting by Svea Herbst-Bayliss and Katya Wachtel; editing by Matthew Goldstein and Phil Berlowitz