Bloomberg News

World’s Richest Lose $14 Billion as Redemptions Roil Cohen’s SAC

June 07, 2013

SAC Founder Steven Cohen

Steven Cohen, founder and chief executive officer of SAC Capital Advisors LP, doesn’t want to let the government get the best of him and is seeking to defend a reputation as one of the most successful hedge-fund managers ever, said the people, who asked not to be named because the information is private. Photographer: Ronda Churchill/Bloomberg

The world’s 200 wealthiest people lost $14 billion from their collective net worth this week as American employers took on more workers than forecast in May, helping the world’s largest economy weather the impact of higher taxes and federal spending cuts.

Hedge fund manager Steven Cohen slipped $500 million, according to the Bloomberg Billionaires Index. Cohen’s firm, SAC Capital Advisors LP, received billions of dollars in withdrawal requests this week, according to two people who saw the contents of a June 4 e-mail sent to employees by SAC President Tom Conheeney.

“We don’t like losing capital, but even with the investors that are leaving, we still have a stable capital base and have been performing well this year,” Conheeney said in the e-mail. Even if the firm ended this year with assets close to where it was four years ago, “we will still be a good-sized firm.”

SAC employees had expected that clients, who faced a June 3 redemption deadline, would take back most of the $4 billion they haven’t already marked for redemptions by early next year, people familiar with the firm said earlier this week. Investors are exiting as the U.S. government intensifies its probe of insider trading at the Stamford, Connecticut-based firm, once one of the best in the industry, with returns averaging 25 percent since 1992.

Cohen, 56, is ranked 119th on the index with a net worth of $9 billion.

Jobs Report

Payrolls rose 175,000 after a revised 149,000 increase in April that was smaller than first estimated, Labor Department figures showed yesterday in Washington. The median forecast in a Bloomberg survey called for a gain of 163,000. The unemployment rate climbed to 7.6 percent from 7.5 percent as a surge in the number of people entering the labor force swamped the number of positions available.

The Standard & Poor’s 500 Index gained 0.78 percent during the week to close at 1643.38 in New York. The Stoxx Europe 600 Index dropped 1.82 percent, closing at 295.40.

Microsoft Corp. (MSFT:US) co-founder Bill Gates, 57, remains the richest person in the world, a title he recaptured three weeks ago. Gates’s fortune has risen $9.6 billion this year to $72.4 billion as shares of the world’s largest software maker have soared 34 percent.

The Redmond, Washington-based company unveiled its first new Xbox in almost eight years on May 21, seeking to position the console at the center of games and home entertainment against a growing roster of competitors that includes Apple Inc. and Facebook Inc. (FB:US)

Slim, Buffett

Mexico’s Carlos Slim is $5.5 billion behind Gates. The telecommunications tycoon’s fortune has fallen $8.3 billion this year as his main holding, a 44 percent stake in America Movil (AMXL) SAB, the largest mobile-phone operator in the Americas, has fallen 14 percent.

No. 3 on the Bloomberg ranking is Berkshire Hathaway Inc. (A:US) chairman Warren Buffett. Shares of the Omaha, Nebraska-based company are up 29 percent this year, elevating the 82-year-old’s fortune to $61.6 billion.

Investors are driving railroad stocks to the best start to a year since 2008, in a bet that Warren Buffett is right about the carriers’ long-term prospects. A 26 percent surge for the Standard & Poor’s 500 Railroads Index in 2013 is outpacing the S&P 500’s 15 percent jump.

The rail index’s return has more almost doubled the S&P 500’s advance since Buffett’s Berkshire Hathaway Inc. agreed to buy Burlington Northern Santa Fe Corp. in 2009.

Freddie, Fannie

Paulson & Co., the hedge fund run by billionaire John Paulson, 57, has been lobbying for a privatization of Fannie Mae and Freddie Mac to boost the value of preferred shares it bought. The companies’ common shares have lost about half their value since peaking last week. Much of the decline came after Bloomberg News reported that two senators were drafting a bill under which Fannie and Freddie would be placed into receivership and liquidated.

If Paulson can profit from an act of Congress, it boosts the odds that lower-ranking common shareholders might benefit, too. The billionaire is 110th on the index with a $9.7 billion fortune.

Europe’s second-richest person, Ikea founder Ingvar Kamprad, handed his youngest son the chairmanship of the company that controls the brand and concept of world’s biggest home-furnishings retailer.

Mathias Kamprad replaces Chairman Per Ludvigsson as part of a generational shift that has been in preparation for years, Inter Ikea Group said in a June 5 statement.

Ingvar Kamprad, 87, started selling matches to his neighbors at age five and founded Ikea in 1943. He retired as chief executive officer of the company in 1986, and has a $53.1 billion fortune.

“I see this as a good time for me to leave the board of Inter Ikea Group,” the elder Kamprad said in the statement, adding that he won’t stop working.

To contact the reporter on this story: Peter Newcomb in New York at pnewcomb2@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • MSFT
    (Microsoft Corp)
    • $46.68 USD
    • 0.16
    • 0.34%
  • FB
    (Facebook Inc)
    • $77.0 USD
    • 0.57
    • 0.74%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus