Taking Pulse Of Steve Cohen's Mood An Art And A Science

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Over at Dealbook today you will find an article by Matthew Goldstein and Alexandra Stevenson that takes stock of the government's futile attempts to ensnare hedge fund manager Steve Cohen, in the wake of last week's guilty verdict against one of his former traders, Mathew Martoma. According to Martoma's attorney, his client was but a pawn/grain of sand in the Feds' quest to nail Cohen for insider trading. While the conviction of Martoma was a win for Preet Bharara and Co in that it brought their record against accused insider traders to 79-0, things didn't turn out precisely as they had hoped, as Martoma never turned on Cohen by revealing the damning details of a crucial 20 minute conversation the two had over the phone, before SAC began dumping its shares of Elan and Wyeth.

Will Martoma ultimately turn on Cohen in an effort to receive a more lenient sentence? It's possible, though somewhat unlikely, as 1) He hasn't up to this point and 2) His "testimony is not worth much to prosecutors now unless he has some email document, or other piece of physical evidence to support any version he would present of his conversation with Mr. Cohen. Plus, the revelations that he attached fake Harvard Law transcripts to his applications for prestigious clerkships did not exactly do wonders for his credibility. Obviously this is good news for Cohen, and adding to the 'everything is coming up roses for the Big Guy' column is the fact that, amazingly, people supposedly "still want to work [at SAC.]"

Which brings us to the most important part of Goldstein and Stevenson's piece: the window it give us into one of the more vital and consequential tasks SAC employees find themselves performing daily:

...taking stock of Cohen's mood and predicting where it might be headed.

From Dealbook:

“How is the big guy?”

That was the question Phillipp Villhauer, the head of trading at SAC Capital Advisors, asked his assistant in an email as he headed to a meeting in New York on July 21, 2008. It was also the question hanging in the air of Room 110 in the federal courthouse in Manhattan over the last five weeks...

Earlier on that July day when Mr. Villhauer sent the “big guy” email, he received specific instructions from Mr. Cohen. Mr. Villhauer was to take steps to sell a large stock position that SAC had amassed in the pharmaceutical company Elan. (Later, the fund would also sell a large stake in Wyeth.) Mr. Cohen emphasized to Mr. Villhauer that the stock should be sold quickly and with “limited visibility,” so as not to raise eyebrows on Wall Street or even in the ranks of SAC’s roughly 900 employees.

Later, on his way to New York, Mr. Villhauer was curious about Mr. Cohen’s mood back at the firm’s offices in Stamford, Conn. His assistant responded that Mr. Cohen “seems mellow,” but quickly added, “he’ll probably blow” in a few hours.

Obviously, this was not the first time a SAC employee was asked to take Cohen's temperature, nor was it the last. Knowing The Big Guy's mood is, was, and always will be the most important piece of knowledge a trader can have at SAC, whether it's a hedge fund or family office. An insider tip of its own, if you will. Below, a few more unconfirmed examples we've obtained.

From: [redacted at SAC Capital]

To: [redacted at SAC Capital]
Date: October 5, 2005
Subject: SC

How's he seem this morning?

________________________________

From: [redacted at SAC Capital]
To: [redacted at SAC Capital]
Date: October 5, 2005
Subject: RE: SC

Okay right now, but his blood sugar's about to drop.

From: [redacted at SAC Capital]

To: [redacted at SAC Capital]
Date: February 10, 2007
Subject: ...

Have something to run by Steve. Mood check?

______________________________________

From: [redacted at SAC Capital]
To: [redacted at SAC Capital]
Date: February 10, 2007
Subject: RE...

been in a zen place for the last hour but I can see him ripping out someone's gall bladder via their ass before the close.

From: [redacted at SAC Capital]

To: [redacted at SAC Capital]
Date: September 27, 2011
Subject: do i dare?

?

_____________________________________________

From: [redacted at SAC Capital]
To: [redacted at SAC Capital]
Date: September 27, 2011
Subject: RE: do i dare?

Just got back from Super Duper Weenie, so three hours of calm before he kicks someone in the chest until there's blood in their stool.

PPlease
consider the environment before printing this email

In the SAC Saga, It’s Hard to Chase a Shadow [Dealbook]

Related

Steve Cohen Bought Himself A Little Pick-Me-Up

As you may have heard, the last number of months have been a bit tough on hedge fund manager Steve Cohen. In November, one of his former employees, Mathew Martoma, was accused of orchestrating "the most lucrative insider trading scheme ever," in a criminal complaint in which Cohen was referenced as Portfolio Manager A. A week later, the Times lopped 21,000 square feet off his house. Earlier this month, he had the pleasure of setting the record for the largest insider trading fine ever, at $614 million, a sum that does not even put this whole thing behind him, as the settlement "doesn't preclude the Securities and Exchange Commission from pursuing Cohen himself in the future." So you'll excuse the Big Guy if he felt the need to indulge in a little retail therapy recently.