The Fabulous Life Of Hedge Fund Legend Steve Cohen

Steve Cohen

Photo: Getty Images

Billionaire Steve A. Cohen, who runs the super-secretive hedge fund SAC Capital Advisors, is known on Wall Street for being one of the most successful traders.He began his Stamford-headquartered hedge fund in 1992 with only $25 million. Today the fund has $14 billion assets under management and employees around 900 people globally. 

During the late 1990s and early 2000s, Cohen came into prominence as a powerful Wall Street trader for his grand slam returns. 

These days he’s in the press for another reason.

He has been fingered in several media reports as “Portfolio Manager A” in the latest insider trading case against former CR Intrinsic (a subsidiary of SAC) portfolio manager Mathew Martoma.  

It’s widely known that Cohen is the ultimate target of the Securities and Exchange Commission and the Department of Justice. 

While he has been implicated in the latest insider trading case, it’s important to keep in mind that he has not been charged with any wrongdoing.  In fact, he may never be charged. 

During a conference call last week where SAC management disclosed that it had received a Wells Notice from the SEC, Cohen told investors that he’s confident he acted appropriately and takes these matters very seriously.  

We really don’t know the notoriously press-shy hedge fund manager, who rarely gives interviews, all that well.  

Now let’s take a tour of his fabulous life and tremendous career and get to know him better. 

He's a Long Island native. He grew up in a middle class family and had a lot of siblings.

Steve Cohen was born on June 11, 1956. He's the third out of eight kids.

He grew up on Great Neck, Long Island, New York.

His father worked at a dress manufacturer and his mother was a homemaker who also taught piano lessons.

Source: BusinessWeek, Source: WSJ

In high school, the billionaire worked at a supermarket.

Cohen was a 'fruit boy' at Bohack supermarket where he made a $1.85 an hour.

He quit that job because he was making more at the poker table.

Source: Vanity Fair

He graduated from Wharton with a degree in economics.

He studied economics at the Wharton School of Business at the University of Pennsylvania.

Outside of class, he traded stocks and beat his friends at poker. He was in a fraternity, too.

According to a 2003 Bloomberg Businessweek profile, Cohen loved stocks so much that he would trade them in between his classes.

In his spare time, he would also beat all of his friends at poker.

He joined the Zeta Beta Tau fraternity.

Source: Businessweek

He started his career on Wall Street at Gruntal & Co. He essentially became a legend on his first day.

After graduating in 1978, he went to Wall Street to work for at boutique investment banking and brokerage firm Gruntal & Co. as a junior trader in the options arbitrage group.

We've all heard the Wall Street legend that he made $8,000 his first day and was bringing in around $100,000 each day.

Source: BusinessWeek

He became a star at Gruntal and was running his own group of traders.

By 1984, he started running his own group at Gruntal & Co.

He did this until he launched his own hedge fund.

Source: BusinessWeek

Then in 1992, he launched SAC Capital in the same building as Gruntal.

In 1992, Cohen rented office space nine floors above Gruntal to start his own $25 million hedge fund, SAC Capital.

Some of his traders from Gruntal joined him there.

SAC is headquartered in Stamford, Connecticut.

Source: Vanity Fair

The super-secretive SAC Capital is one of those closely followed hedge funds on Wall Street. Here are some details about it what the trading floor is like:

Here's how the Wall Street Journal described the trading floor in a 2006 article:

The 20,000-square-foot trading room at SAC Capital Advisors, chilled to 70 degrees to keep traders alert, was hushed. Mr. Cohen, who sits at its centre, likes it that way. Phones blink rather than ring. Computer hard drives had been moved off the trading floor to eliminate hum. Rows of traders wearing SAC fleece jackets watched Mr. Cohen nervously, waiting for an order to sell shares.

Another interesting tid-bit about SAC is Cohen hired an in-house psychiatrist for his traders.

In the early 1990s, Cohen hired psychiatrist Dr. Ari Kiev, who has worked with Olympians, to coach his traders in coping with stresses from the market.

He died in November 2009 at the age of 75.

Source: Dealbook

SAC makes up a significant chunk of trading on the Street.

Back in 2006, the WSJ reported that SAC's trading accounted for 2% of all of the stock market activity.

As you can imagine, this would make them a desired client on the Street.

Cohen first became a household name on Wall Street in the late 1990s and 2000.

In 1998 and 1999, SAC delivered 70% annual returns.

Then, in 2000, his hedge fund bet against tech stocks and brought in 70% returns again!

Source: Vanity Fair

Cohen has been married two times. In 1979, he got married to his first wife. The marriage didn't last long.

When he was 23 years old, Cohen married Patricia Finke.

They had two children together and got divorced in 1988.

Source: Vanity Fair

Years later, Patricia tried suing Cohen alleging he was running a racketeering scheme and hid millions from her.

In 2009, Cohen's ex-wife Patricia alleged that he hid millions from her and some of that money had come from insider trading in RCA shares back in 1985 before it was acquired by General Electric.

The case was ultimately dismissed in 2011.

Source: Dealbook

He met his current wife through a dating service.

Cohen met his wife Alexandra (Alexandra Garcia) through a dating service in 1991 after he divorced his first wife.

Alexandra was a single mum of Puerto Rican descent who grew up in Washington Heights.

They have four children together.

Source: Vanity Fair

The Cohen family lives in this jaw-dropping massive Connecticut mansion.

The Cohens live in a 35,000 square foot home on 14 acres in Greenwich, Connecticut. They purchased the jaw-dropping mansion in 1998 for $14 million.

The lavish estate features a basketball court, an indoor pool and a 6,734 square-foot ice skating rink.

Source: Dealbook

One thing to know is that he hates being called 'Stevie.'

On the Street, Cohen is often referred to as 'Stevie.'

He apparently hates that nickname.

Source: Reuters

He's incredibly media-shy.

Cohen rarely gives press interviews. He did, however, give a rare interview in 2010 to Vanity Fair.

What's more is there are very few photographs of him.

He did make an appearance on a talk show back in the 90's where he talked about sleeping with his ex when he was dating Alex.

It's widely known that Cohen is press-shy and super-secretive.

However, back in 1992 he made an appearance on an incredibly famous Hispanic talk show, 'Cristina' (she's like a Latin American Oprah) in an episode called 'He Acts Like Her Husband, Too.'

During the episode, Cohen talked about sleeping with his ex-wife when he started dating Alex, his current wife. He stopped when he got engaged.

Source: New York Post

He's a passionate art collector.

Cohen has been collecting art since 2000.

His impressive art collection, which is said to be worth around $1 billion, includes pieces by Monet, Picasso, Jasper Johns, Jeff Koons, Damien Hirst, Willem de Kooning, Francis Bacon and Andy Warhol, according to a 2010 Vanity Fair profile.

Cohen, who is seen as a fixture at Art Basel, is missing at this year's high-profile art show in Miami, the New York Times reported.

Source: Vanity Fair

Cohen is still a really good poker player, too.

Cohen has been playing poker since high school.

'It's the same with trading. I think about the risk. I think about the trade. I don't think about the money. Poker--that was the biggest determinant in my learning to take risks,' he told Vanity Fair in 2010.

Source: Vanity Fair

He owns a small stake in the New York Mets.

In February 2012, he bought a 4 per cent stake in the Major League baseball team for $20 million, Reuters reported citing a person familiar with the deal.

Cohen actually grew up watching Mets games.

Source: Reuters

Of course, we all know Cohen is fabulously wealthy.

According to Forbes, he brought home a salary of $600 million in 2011.

With an estimated net-worth of $8.8 billion, he ranks #40 on the Forbes 400 and 101 on the Forbes Billionaires.

Source: Forbes

He's in the spotlight now after being implicated in the latest insider trading case. He has not been charged.

Last month, former SAC portfolio manger Mathew Martoma was charged in what is believed to be 'the most lucrative' insider trading scheme ever.

Martoma worked at CR Intrinsic Investors, a subsidiary of SAC. He has been accused of using negative confidential drug trial info in pharmaceutical companies, Elan Corporation and Wyeth, between the summer 2006 and mid-July 2008.

Several media reports have identified 'Portfolio Manager A' in the complaints as Steve Cohen.

Cohen told investors in a client conference call that he's confident he acted appropriately. He has not been charged. He might not ever be charged.

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