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Steve Cohen‘s Return to Wall Street May be Imminent

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Wall Street is fervently anticipating the return of Steve Cohen — the illustrious hedge fund mogul whose regulatory ban on managing outside money has ended as of December 31st. The 61-year-old American investor and hedge fund manager is expected to launch a new fund, dubbed Stamford Harbor Capital, as early as February 1st. As reported by the NY Post, the fund is raising $2 billion to $3 billion in outside money.

With an estimated net worth of $13 billion in 2017, Steven Cohen is ranked by Forbes as the 30th richest person in America, the 72nd richest man in the world, and the 3rd highest earning hedge fund manager. In July 2013, the SEC closed his fund S.A.C. Capital Advisors. He was not personally charged with anything, but he was held responsible for insider trading within his firm. The company paid a $1.8 billion fine. In 2016, Cohen was banned from managing other people’s money for two years, for his “failure [to] reasonably supervise” Mathew Martoma, who was convicted of insider trading. The Wharton School graduate has not been absent from the markets, as he has been managing his own family office. The $10 billion fortune operates under the name Point72 Asset Management, which he founded in 2014.

Cohen is reputed for being a great stock picker and for producing returns well above the industry average. SAC Capital boasted annual returns of 30 percent throughout the hedge fund’s duration. Cohen’s new fund will rest on this reputation to boldly charge fees well above the industry standard. Hedge funds have generally changed investors 2 percent of assets being managed plus 20 percent of profits (known as the 2 and 20 model). Of late, companies have discounting these fees due to subpar performances. As per a March 2017 regulatory filing, Cohen will come back with great confidence charging a minimum of 2 percent for the management fee and a performance fee of 10 percent to 50 percent. The Post reported, the fee will probably be 2.75 percent of managed assets and 30 percent of profits.

Despite the potent cost of the anticipated fund, Wall Street is excited for the comeback. Many of his former investors are reportedly waiting eagerly to sign back on with him. Cohen “has created a lot of goodwill and loyalty from his previous investors that benefitted from his strong performance,” commented Don Steinbrugge of hedge fund consulting firm Agecroft Partners. Still, though his successful management precedes him, some investors are wary of the new hedge fund’s high fees and the amount of scrutiny that will likely surround it.

By: Hadassa Kalatizadeh

 

 

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