Steve Cohen, the billionaire hedge-fund manager briefly
banned from the industry after an insider-trading investigation,
this week sent investors documents pitching his new fund,
Stamford Harbor Capital, a likely investor who has reviewed the
deck told Business Insider.
The pitch is the latest move cementing the controversial
billionaire’s return to managing money.
Investors will have to agree to steep terms to put their money
with the famed investor — including a minimum investment of $100
million and an annual management fee of over 2.5% of those assets
— this person said, asking not to be identified discussing
Jonathan Gasthalter, a spokesman for Cohen, declined to comment
for this story.
Cohen’s new fund is arguably one of Wall Street’s most
anticipated new launches. Bloomberg News
reported earlier this month that he could raise between
$2 billion and $10 billion. At the high end it would be the
largest hedge-fund launch in history.
‘Wink wink, nudge nudge’
Until now, though, investors, advisors, and others in the
hedge-fund industry said Cohen’s representatives had limited
themselves to vague and almost bizarrely hypothetical
conversations about the fund along the lines of: If a particular
person named Steve Cohen happens to launch a fund, and that fund
happens to open next year, what would it take for an investor to
“It was a lot of wink wink, nudge nudge,” said one person, who
spoke of meetings before the documents were sent this week. As
Bloomberg News reported earlier this month, the official
line, meanwhile, was that Cohen was undecided about his
Cohen’s been running a family office called Point72, with
some $11 billion in assets, since 2014 after he agreed not to
manage other people’s money and return outside investors’
capital. The agreement came after a years-long
insider trading investigation that ended with a
conviction for one of Cohen’s subordinates but not him. His
failure, according to
the SEC, was to supervise those traders as head of SAC
That ban will be lifted in January 2018.
Now, in anticipation of this, Cohen’s marketing is being led by a
man named Doug
Blagdon at an advisory firm called Shorebridge Capital who
previously led the marketing effort at SAC Capital.
Blagdon didn’t immediately respond to requests for comment.
Wealthy investors, funds of hedge funds and sovereign wealth
funds are the most likely investors in Cohen’s new fund, people
in the industry say. Public pensions, endowments, and
foundations that have become
major backers of the hedge fund industry are likely to
stay out because they face greater public scrutiny and may
find it difficult to explain an investment with a manager who —
though he generated huge profits — was tarred by an
association with a huge insider trading scandal.
Cohen is also said to have lined up firms to handle the back-end
of a hedge fund’s operations — the prime brokers who would manage
settlement of trades and other basic functions as well as the
“cap intro” teams at big banks who serve as gatekeepers to
investors. Still, the pitch to investors is not yet widespread,
and may never be. Many investors who are usually briefed on hedge
fund launches say they have yet to hear anything.
Privately, Cohen has expressed doubts about whether he should
come out again, a potential investor who also knows Cohen
personally said. Cohen’s family office hasn’t recently posted the
kind of 30% annual returns that he was once famous for.
“I suspect the real question is whether Cohen can still
achieve outsized alpha,” said Chris Cutler, a consultant, using a
hedge-fund term for outperformance. “If even he can’t, what is
the fate for other long/short-focused managers? I think
Cohen will have a willing and ready list of LPs ready to invest
with him. He doesn’t need to worry about which LP’s won’t invest
Staffers at Point72, which has been investing Cohen’s
billions since SAC got shut down, have been largely kept in
the dark. They were unsure until recently whether Cohen would
open up again. Those who know Cohen personally say the
Staffers said they hoped that Cohen would raise outside
money – it would show a sense of permanency for their jobs and
would make it less likely that Cohen would shut the operation
down voluntarily, a person familiar said. Creating a hedge fund
would also spread the cost of employees and support staff among
other investors — as Point72 is currently managing Cohen’s own
money and that of some employees.
The hefty demands being made of investors — the minimum
investment, fees and lockup period are all high by industry
standards — are a luxury only afforded to the most superstar
investors. Cohen is one, famed for his consistent double-digit
returns before he was rocked by the insider-trading
He has an army of admirers, often those who were made rich by
him, either by working for him directly or by investing with
him. Many think he has never done anything wrong, and
that he’s the greatest investor of all time.
But he’s also a polarizing figure because of the legal
For at least two investors Blagdon has reached out to, and
other potential investors who have yet to hear from him, the
answer is a blatant “no.”
No matter that the past several years, Cohen has tried to clean
up his image. He hired former Department of Justice staffers and
McKinsey consultants, and started a training program for young
college grads – something
Business Insider was invited to tour.
To show how compliant he was, he even put a ban on hiring from
Visium, an $8 billion-dollar fund that shut down amid one of the
most recent insider-trading scandals,
before the public knew that Visium was even under
Still, it would be “willful ignorance” to think Cohen didn’t have
some hand in the trading, or at least know about it,
one person in the industry said.
Investors who worry about this won’t be investing.