Investors yank funds from SAC Capital
SAC Capital recently announced that it expected about $1 billion to be redeemed by outside investors, largely as a result of the insider trading scandals that have engulfed the company. The hedge fund firm founded by Steven Cohen has not been charged with any wrongdoing, but the controversy has been more than enough cause for discomfort on the part of limited investors.
When the $1 billion figure was released, I thought it might be a high-ball estimate, one that was designed for media. The PR ploy, I thought, was to over-estimate redemptions, so when the real figure comes in, it would appear as though the damage was less than expected. But the real figure is now in---and unfortunately the totals are worse than let on.
According to CNBC, limited partners have decided to redeem $1.68 billion from the fund firm. The funds will be redeemed in quarterly installments over the next 12 months.
The damage could have been even worse. Influential Blackstone Group has decided, for the moment, to leave $550 million in client money with the controversial hedge fund firm. It has, however, negotiated a special withdrawal right and has been given 3 more months to make a final decision on whether to redeem or not. Other have apparently also been given additional time to make decisions.
SAC Capital is not in the danger zone right now. After all, it has more than $15 billion in assets under management. But only about $6 billion is from outside investors.
If the news continues to be negative regarding the insider trading investigation, redemptions will likely escalate, casting doubt more doubt about the future of the firm.
- here's the CNBC report