Back in September, Steve Cohen was acting somewhat reticent about his seemingly inevitable return to the hedge fund industry, which became possible at 12:00 a.m. yesterday. There were “bizarrely hypothetical conversations” and reports of expressions of private doubts on the part of the Big Guy himself. There were those who questioned the wisdom of the enterprise regardless. After all, who wants to entrust their money to a guy who’s just doing it to pay his taxes, especially if said guy is all but invisible at night due to being drenched in black edge?
That elaborate pantomime notwithstanding, it seems it is would-be investors in SAC Capital Partners II: Stamford Harbor Capital who are playing hard to get. At issue? Well, there are the fees, which may be low by Steve Cohen standards but which are far above the rapidly declining hedge-fund average. And then there’s the lock-up, which at three years is roughly three years longer than most investors are willing to tolerate these days. Oh yea, and the black edge thing. All of which add up to substantially less than $20 billion.
The firm that is marketing his hedge-fund-in-waiting has received $2 billion to $4 billion in commitments from investors, said three people familiar with the matter who were not authorized to speak publicly….
And according to several industry consultants, some pension funds and institutional investors are wary about putting their money with Mr. Cohen, who remains tainted by the insider-trading scandal that engulfed him and his former hedge fund.
There is also anxiety, these consultants say, that Mr. Cohen’s new firm plans to charge higher-than-average fees and will not let some investors withdraw their money for at least three years. Others wonder if the trader’s best days are behind him….
Stamford Harbor has not yet told investors or potential trading partners when it intends to formally open for business. It is not expected to begin officially taking in money from investors until February, two of the people said.