Steven A. Cohen, the hedge-fund billionaire whose former firm pleaded guilty to insider trading charges a few years ago, is planning his comeback with a $20 billion pool of money.
The new operation would start as soon as early 2018, according to sources cited by The Wall Street Journal. The $20 billion target would exceed the $16 billion that Cohen’s SAC Capital Advisors oversaw at its height.
SAC pleaded guilty to criminal insider trading in 2013 and paid $1.8 billion in penalties, although Cohen wasn’t charged personally. A civil settlement he negotiated with regulators restricted him from managing a registered fund until 2018, the WSJ reported.
In the meantime, Cohen has overseen $11 billion in family wealth at Point72 Asset Management, a 1,000-employee operation in SAC’s former office in Stamford, Connecticut. Most or all of that $11 billion would become part of Cohen’s new hedge fund, unnamed sources told the newspaper.
Hedge funds have lost their reputation for market-beating returns in the past few years, according the Washingon Post.
Hedge funds posted an average gain of 5 percent last year, according to Hedge Fund Research, compared with the 10 percent gain for the S&P 500 stock index. Meanwhile, more than 1,000 funds closed down last year, the most since the 2008 financial crisis.
“The hedge fund industry has started to collapse on itself,” Charles Geisst, a Wall Street historian at Manhattan College in New York, told the Washington Post. “There are too many players going after the same thing.”
Investors are putting greater amounts of money into passive investing strategies that track the movements of a broader index.
More than 90 percent of large-cap active funds that oversee at least $6 billion performed worse than their passive counterparts, according to S&P Dow Jones Indices.
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