Steve Cohen’s super fu
nd, SAC Capital, traded at least 11 stocks that prosecutors have identified in their insider trading cases against other hedge funds.
That by itself doesn’t say much: there are thousands of hedge funds, and hundreds of them trade in similar stocks.
For example, we found a ton of hedge funds (including Citadel, Glenview, Bridgewater and RenTec) that were holding Flextronics in the quarters in 2009 that correspond to the insider trading complaint against Walter Shimoon.
What is interesting about SAC’s trading of the stocks is the timing.
The $12.8 billion hedge fund’s positions in the 11 stocks moved up or down consistent with buying and selling that federal prosecutors have described in criminal filings related to other insider trading cases.
Relevant stocks include Advanced Micro Device (AMD), Marvell, Akamai, Atheros Communications, ATI, Clearwire, EBay, Google, Hilton, Intel and Polycom.
And here’s some examples of the eyebrow-raising timing of those trades, via Bloomberg.
It’s important to remember that though SAC was subpoenaed by the FBI, the firm has not been accused of any wrongdoing. The raiding and subpoenaing of a crew of hedge funds headed up by SAC alum, however, hasn’t gone unnoticed and the fact that former employees have been charged has put Cohen’s fund in the spotlight.
SAC tripled its stake in Hilton to 1.2 million shares in the quarter ending June 30, 2007. On July 3, Blackstone announced would buy Hilton; Hilton shares surged 26%. The hedge fund almost entirely sold out of the stake in the next quarter.
That basically replicates the pattern of trading in Hilton shares executed by alleged insider trader, Raj Rajaratnam.
SAC increased its stake in Clearwire to 1.1 million shares in Q1 of 2008. In Q2, it sold two-thirds of its position.
That basically replicates the pattern of trading in Clearwire shares executed by alleged insider trader, Raj Rajaratnam when he allegedly received a tip that Intel was planning to invest in the broadband company, after which the shareprice surged.
Just before AMD announced it would be acquiring ATI Technologies in July of 2006, SAC increased its holding by 89% to 479,261 shares.
The deal became public on July 24, and the shareprice increased by 19% on that day. SAC liquididated its the next quarter.
That is similar to the pattern of trading in AMD shares executed by alleged insider trader, Raj Rajaratnam. He allegedly received a tip about the deal in March of 2006.