The lamps are going out all over Hedgistan, as losses mount and redemptions suck cash out of alternative investments. SAC Capital Advisors, which had largely gone to cash to avoid turbulent markets, has suffered badly in recent weeks. We’re told by one of those people familiar with the matter that SAC is facing redepmtion requests that amount to $3 billion and is preparing to lay off scores of employees.
Fortune magazine’s star reporter Roddy Boyd has some background on SAC’s performance:
But now, some wrong-way bets at SAC – notably on the disastrous Volkswagen-Porsche trade that hammered many hedge funds last month – are forcing fund founder and general partner Steve Cohen to dismiss staff in the wake of double-digit losses.
While Cohen has hardly been shy about reducing his exposure to equity markets and “going to cash,” SAC – with $16 billion in assets – was still whipsawed in October’s ugly markets, booking an 11% loss for the month and 18% for the year to date.
Bess Levin, my old colleague at DealBreaker.com, reports that SAC’s flagship fund is down 12% for the October, and 18% for the year. She adds that it’s multistrategy fund is down 6.5 per cent for October, and down 12 per cent. For those of you not familiar with Levin’s reporting, let me just say that she knows what she’s talking about when it comes to Stevie Cohen’s funds. Her sources are very good on this one.
As Boyd points out, this performance is not too shabby. “To be fair, being down under 20% is, according to trading desk wags, ‘the new up’ with respect to performance,” Boyd writes. “And in the hedge-fund heavy Greenwich- Stamford, Conn., corridor, being down only 12% is likely the object of dreams when losses of between 20% and 40% have become the norm.”
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