Bloomberg News

SAC Said to Increase Trading in Japan, Open Tokyo Office in 2012

October 27, 2011

Oct. 27 (Bloomberg) -- Steven A. Cohen, head of the $14 billion SAC Capital Advisors LP, plans to open an office in Tokyo in the first quarter of 2012 because he sees increased opportunities in Japan, according to two people who attended the firm’s investor day meeting yesterday.

SAC executives told investors, who gathered at New York’s St. Regis hotel, that they added four portfolio managers in Asia this year, bringing the total to 13, according to the people, who asked not to be named because the fund is private. SAC has offices in Hong Kong, Singapore and Beijing.

“Japanese long-short equity funds, particularly those that are market neutral, have done fairly well this year, so it makes sense that SAC might be interested in that market,” said Pierre Merillon, who heads research on global macro funds at Paris- based Darius Capital Partners, which helps institutions invest in hedge funds.

Jonathan Gasthalter, a spokesman for Stamford, Connecticut- based SAC, declined to comment on the hedge fund’s plans.

SAC has returned about 7 percent this year through September, according to investors, compared with a loss of 10 percent for the Standard & Poor’s 500 Index and a drop of 9.5 percent for Chicago-based Hedge Fund Research Inc.’s index of equity hedge funds.

SAC’s portfolio is positioned with a very low net exposure, meaning it has roughly the same amount of money betting on stocks Cohen and his other portfolio managers expect to rise as stocks they expect to fall, the people said. The firm is borrowing about $1 for every dollar of assets. SAC’s leverage generally averages between 3 and 3.5 times net assets.

Sector Heads

The firm’s flagship fund saw net inflows in 2011 before Cohen decided to close it to new investments in August, the people said. The fund has raised $2.8 billion since June 2009.

The inflows have come even as the Securities and Exchange Commission and the U.S. Attorney in New York said this year they’re looking at some SAC trades as part of a broad federal crackdown on insider trading. SAC has not been accused of any wrongdoing.

The hedge fund now has three so-called sector heads covering technology and media, consumer stocks and energy, the people said. These managers feed the best ideas from the firm’s roughly 100 teams to Cohen, who runs a portfolio of his own.

SAC recently cut its health-care sector head position following a wrong-way bet on Dendreon Corp. Shares in the Seattle-based drugmaker plummeted 67 percent on Aug. 4 after the company withdrew its revenue forecast for 2011. SAC was Denedron’s largest outside shareholder as of June 30, owning 8.6 million shares, according to data collected by Bloomberg.

Reinsurance Bid

Benjamin Slate, who was the health-care sector head, is still working at SAC, the people said.

SAC also told investors that it plans to open SAC Re, a reinsurer, next year. Other hedge funds, including Daniel Loeb’s Third Point LLC and David Einhorn’s Greenlight Capital Inc., have also entered the reinsurance business.

SAC seeks to raise $500 million for the reinsurer, which will help insurers shoulder risk on their property and casualty policies. The premiums the company collects will be invested in SAC’s fund. The reinsurer will be run by Simon Burton, former deputy chief executive of Lancashire Holdings Ltd., an insurer based in London.

--With assistance from Saijel Kishan in New York. Editors: Steven Crabill, Josh Friedman

To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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