Scandal or not, one SAC investor can't get enough of Steve Cohen

Tue May 21, 2013 7:50pm EDT
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By Svea Herbst-Bayliss and Sam Forgione

BOSTON/NEW YORK (Reuters) - As federal prosecutors circle Steven A. Cohen's $15 billion hedge fund in a long-running insider trading probe, one financial adviser in Texas is so devoted to the billionaire investor that he may give him more money.

"I'm thinking about putting more money with him," said Ed Butowsky, managing director at Chapwood Capital Investment Management, who manages $1 billion in client money.

The Dallas-based adviser did not say how much his wealthy clients have invested with Cohen's SAC Capital Advisors, but said the figure tallies into the tens of millions.

"Stevie Cohen is the Michael Jordan of hedge fund managers," Butowsky said, comparing the billionaire trader's success in the markets to the feats of the legendary professional basketball star. "I'd be a fool to take out money."

With the quarterly June 3 deadline for outside investors in SAC Capital to decide whether to withdraw money from the hedge fund, it is unclear how many of Cohen's other investors share Butowsky's sentiment.

People familiar with the fund, said Cohen is bracing for additional redemption requests, especially after the revelation that federal prosecutors recently sought to compel him to testify before a grand jury in connection with the insider trading investigation of SAC Capital.

Outside investors like Butowsky and the much bigger Blackstone Group are weighing whether to bolt from SAC Capital or stick with a firm that has delivered a 25 percent annual return over its 21-year history.

Earlier this year, outside investors, who account for roughly 40 percent of the money managed by SAC Capital, notified Cohen they intend to withdraw $1.7 billion by year's end.   Continued...

Hedge fund manager Steven A. Cohen, founder and chairman of SAC Capital Advisors, responds to a question during a one-on-one interview session at the SkyBridge Alternatives (SALT) Conference in Las Vegas, Nevada in this May 11, 2011, file photo. REUTERS/Steve Marcus/Files