SAC Capital Advisors, owned by billionaire trader Steven Cohen, may consider shedding staff, shuttering offices and scaling back some of its trading as outside investors continue to pull back their money from the firm, according to a report published in Reuters.
The move could cost the Wall Street firms hundreds of millions of dollars a year in trading commissions, the publication reported quoting industry experts.
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"There are going to be a lot of tough choices for Steve Cohen to make if he loses the bulk of his outside money, and one of them is probably going to involve trimming his staff," Reuters quoted Daryl Jones, director of research at Hedgeye Risk Management, as saying.
Investments from outside
As reported earlier, outside investors were expected to redeem between $3 billion and $4 billion from the firm. Outside investors account for roughly $6.75 billion of SAC Capital’s assets.
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By GlobalDataSAC’s biggest outside investor Blackstone Group intends to ‘fully redeem’ a significant part of the approximate US$550 million it has invested with the hedge fund.
The flood of money moving out of SAC Capital comes as the insider trading investigation, now in its sixth year, continues to ensnare more people who once worked for the firm.
Numbers game
According to Reuters’ report, one area where Cohen could easily cut is marketing and business development, which combined employ about three dozen people. Other cuts at his 950-employee firm also could come from the finance and accounting departments, which employ 130 people.
Regulatory filings show that just about 400 employees perform ‘investment advisory functions’ like trading and research. Investment advisory includes SAC Capital’s roughly 115 portfolio managers, who oversee trading at the hedge fund.
Reports have been rife as well regarding Cohen preparing for a shut down SAC and convert it into a family office to manage his personal funds.
