SAC Capital lost yet another massive influx of cash, the Wall Street Journal reports. This time, from Japanese bank Mizuho Financial Group.
Since the beginning of 2013, the most profitable hedge fund in the world, has been girding its loins for a mass exodus of capital. Investors are running from the scrutiny of an intense SEC investigation into the firm’s operations, as last November, federal prosecutors wrote that SAC CEO Steve Cohen interacted with alleged insider trader, Mathew Martoma in their complaint.
Cohen was mentioned in the complaint as ‘Portfolio Manager A,’ and you don’t want to be Portfolio Manager A.
The exodus of cash has already been public and brutal. Clients can pull 25% of their investments out of the fund every quarter, but they have to give the firm 45 days notice. The next deadline for notifying SAC is February 15th, and a bunch of firms have already announced that they’re clearing out.
Here’s a list of some redemptions made public so far:
- Societe Generale’s Lyxor Asset Management arm (with $113 billion assets under management) announced that it would take its money out of SAC.
- Titan Advisors, a wealth managements firm whose co-founder has been investing with SAC since its early days, also announced that it withdrawal.
- Citigroup Inc.’s private bank last month suggested clients not add to their SAC investments.
- HSBC’s private bank also advised clients to not add money to their SAC investments this month, according to Bloomberg.
SAC has said it expects to see $1 billion worth of redemptions (17% of its total outside investment capital).
Meanwhile, investors aside, there have been a bunch of other signs that things are going south for SAC. The fund is closing its Chicago office and pumping up bonuses for portfolio managers by 3% to stop them from leaving the firm.
In Court, former SAC analyst Wesley Wang walked away from his insider trading guilty plea with a slap on the wrist (2 years probation without a fine) after wearing a wire and naming as many as 20 names connected to insider trading schemes, according to federal prosecutors.
In short: Things are just not looking good.
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