SAC: 30% Gains Annually for 18 Years

There is a fascinating cover story in the April Bloomberg Markets magazine about Steve Cohen, head of the firm whose name bears his initials: SAC Capital.

You may have missed this when it was at Bloomberg online, unfortunately titled as “Cohen Trades Secrecy for Golf With Investors Lured by 30% Gains.” The magazine’s cover story is more appropriately “Steve Cohen’s Trade Secrets.” Unlike the piece, its chock full of great photos and charts.

Some of the details revealed in the article about Cohen’s firm:

• Its Stamford, Connecticut trading floor houses 180-people;
• The firm has 800 employees, including 100 portfolio managers;
• The trading floor is kept at precisely 69 degrees year round;
• SAC Capital buys and sells 100 million shares a day — 1% of total US market volume;
• Typical holding periods: 2-30 days;
• SAC’s fees are unusually high: 3/50, versus the industry standard 2/20;
• Cohen dislikes noise, so the phones on the floor don’t ring; they light up;
• SAC has averaged 30% annual returns for 18 years;
• The fund’s leverage is (rumored to be) about 4 to 1;
• 2008 was his lone negative year at -19%;
• SAC manages $12 billion, down from $18 billion at its peak;
• Numerous small teams manage $300-500 million each
• Cohen accounts for 10% of the firm’s profits — years ago, he did all the heavy lifting, accounting for 50% of SAC’s gains.

The entire article — especially the dead tree version — is worth a read.


Steve Cohen’s Trade Secrets
Katherine Burton and Anthony Effinger
Bloomberg Markets, April 2010
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