When shaking off the mental cobwebs of a much-needed Memorial Day weekend break, it helps to have a piece of news shock us back into action like a proverbial glass of cold water in the face. So we respect the WSJ for trying...
Steven A. Cohen is plotting a return to hedge funds with a giant number in mind: $20 billion.
The billionaire trader, whose former firm pleaded guilty to criminal insider trading charges less than four years ago, wants to amass that amount as part of a new operation that is likely to launch as soon as early 2018, he and his representatives have said in recent conversations with bankers, colleagues and potential investors.
Steve Cohen is returning to managing outside money in a way that unsubtly screams "Eat my butt, SEC!"?
We are...what's the polar opposite of shocked?
Here's the thing about "The Comeback of Steve Cohen:" You can't come back if you never went away. Steve has never stopped being a hedge fund manager and while he has made every effort to vaguely pretend like he spent time wandering in the non-asset managing wilderness, he's actually been involved in two funds simultaneously.
Point72 Asset Management is managing about $11 billion of Steve's money, using hyper-ethical practices and virgin talent trained by Cohen himself to do it. He's also "not" got Stamford Harbor Capital, a fund run by his top guys at Point72 but which Steve does not actively manage. He only literally owns it.
So while the idea of a disgraced, reformed and refulgent Stevie C getting back into the hedge fund game is great narrative (and spare us the "He went to SALT!" horseshit), it's not even within the realm of reality. Of course Steve Cohen is going to back to actively and aggressively managing other people's money: He's STEVE FUCKING COHEN.
And let's also dispel once and for all with this fiction that a $20 billion fund is big for Steve Cohen. He's already got the $11 billion at Point72 which his almost certain to find its way into this new fund and it's hard to fathom that Steve will have a hard time raising money despite Point72 coming out flat recently. Especially when you consider this little nugget:
To get above the target of $20 billion, according to these people, Mr. Cohen is prepared to do what was once unimaginable: lower his once legendary high fees. SAC at one time commanded some of the highest fees in the hedge-fund world—as steep as a 3% annual management fee and 50% cut of all trading profits.
Steve is putting it out there that he's willing to manage your money at the low low price of 2 & 20. You. Are. Welcome.
But hey, this shit it already working...
But his new firm is likely to launch with a so-called pass-through arrangement, a relatively uncommon structure under which recurring expenses are paid directly by investors instead of the fund firm, people familiar with the plans said.
The performance fee, or cut of trading profits, is likely to fluctuate. The highest charges would be levied only when the firm has a banner stretch of investment gains, some of the people said. SAC, along with most of its peers, charged the same percentage fees on any positive investment performance.
Discussions around the new operation are ongoing and may change. Several investors said they would contribute money to the new operation.
While we can't say we missed Steve (because he never went away), we can without hesitation that we did miss the spectacle of wealthy investors happily getting fleeced on fees by Steve A Cohen.
Welcome "back" pal.