NYT: Steven Cohen Makes a Comeback at Premier Hedge Fund Conference

[dr.malone]

Still, there are reminders of the bad days for Mr. Cohen.

 

Last month, a New Jersey appellate court reinstated an 11-year-old lawsuit against Mr. Cohen’s former firm, which involves allegations that SAC conspired with other hedge funds to drive down the price of shares of Fairfax Financial, a large Canadian insurer. Fairfax is seeking billions of dollars in damages, claiming it was the target of a long-running scheme by hedge funds seeking to profit from a sharp decline in the company’s stock price.

 

LAS VEGAS — The billionaire investor Steven A. Cohen may be barred from managing outside money until next year, but he has already hinted that he plans to get back into the hedge game.

 

The most telling sign yet? Mr. Cohen’s unexpected appearance at a Las Vegas hedge fund conference this week.

 

Mr. Cohen was seen late Thursday night playing craps at a table in the casino of the Bellagio Las Vegas, one of the city’s most extravagant hotels. Mr. Cohen, 60, was rolling the dice with Ilana Weinstein, a sister of the hedge fund manager Boaz Weinstein, at a table with a maximum bet of $5,000.

 

Boaz Weinstein and his sister were featured speakers this week at the annual SkyBridge Alternatives Conference, known as SALT — a lavish multiday hedge fund conference that draws a slew of prominent money managers and politicians. This year’s featured guest was Joseph R. Biden Jr., the former vice president.

 

Mr. Cohen’s appearance at SALT — where he also dined privately with a small group of conference speakers, including the prominent short-seller Jim Chanos, the activist investor William A. Ackman and Mr. Biden — was a surprise, given that he was not featured in publicity for the event.

 

Mr. Cohen last attended in 2011, when he was interviewed onstage by the conference’s founder, Anthony Scaramucci. Two years later, Mr. Cohen’s highly successful SAC Capital Advisors was indicted in the biggest securities fraud case ever brought against a hedge fund.

 

On Thursday morning, Mr. Cohen was a featured speaker at an event for veterans at the Bellagio. In recent years, he has become a major benefactor to organizations helping wounded veterans.

 

Later, Mr. Cohen went to see Duran Duran play a private concert for conference attendees.

 

That Mr. Cohen attended other SALT events has renewed speculation that a small investment firm he established last year — Stamford Harbor Capital — will begin raising money from outside investors next year once a two-year ban he agreed to with the Securities and Exchange Commission expires in January.

 

Mr. Cohen agreed to the prohibition, which barred him from managing money for outside investors, to settle accusations of an administrative failure to supervise brought by the regulatory agency.

 

But the man viewed by many as one of the most successful stock traders of his generation was never charged by either prosecutors or regulators with insider trading. And his longtime prosecutorial nemesis, Preet Bharara, who once called SAC Capital a “magnet for market cheaters,” is no longer the United States attorney in Manhattan.

 

In an interview with The New York Times in October, Mr. Cohen gave the surest indication yet that he was looking to reopen a hedge fund, saying that he was “leaning” toward taking outside money from investors in 2018. But he added, “We haven’t made a final decision.”

 

Representatives for Mr. Cohen, who now oversees a $12 billion private investment firm called Point72 Asset Management, declined to comment on Mr. Cohen’s intentions for Stamford Harbor.

 

Mr. Cohen is not allowed to raise money while the industry ban is in place. But there’s nothing to stop him from mingling with potential investors — at conferences or in the casinos.

 

There were no obvious marketing people with Mr. Cohen at SALT, and he did not appear to come with much of an entourage.

 

But someone associated with Mr. Cohen was handing out invitations to a fund-raiser he will hold on Tuesday in Manhattan for Bo Dietl, the former New York police detective and media personality who is planning to run for mayor. Tickets for the event cost $4,950.

 

Mr. Cohen, who is also widely known as a prodigious art collector, gave $1 million to President Trump’s inaugural committee.

 

And Mr. Cohen has become increasingly active in raising and donating money for aiding injured veterans of the armed services. Last year, he committed $325 million to a program to help veterans who had suffered traumatic brain injuries through his Cohen Veterans Network, an organization he set up.

 

His network runs a number of clinics across the United States to provide mental health care to veterans. He became interested in helping veterans because one of his sons served as a Marine after graduating from college and did a tour of duty in Afghanistan.

 

Mr. Cohen’s Point72, which is run as a family office to manage his personal fortune, functions much as SAC did. It employs nearly 1,000 employees in SAC’s former office center in Stamford, Conn., and it has teams of portfolio managers trading mostly stocks and bonds.

 

He wound down SAC around the same time a federal judge accepted the firm’s guilty plea in 2014. In settling with federal prosecutors and the S.E.C., the hedge fund paid $1.8 billion in fines and restitution.

 

Still, there are reminders of the bad days for Mr. Cohen.

 

A federal appellate court recently heard arguments in a bid by a former SAC portfolio manager, Mathew Martoma, who is now serving a nine-year prison term after being convicted in 2014, to win a new criminal trial. Mr. Martoma was convicted in one of the biggest insider trading cases ever — a trial in which Mr. Cohen’s name frequently came up during testimony.

 

Last month, a New Jersey appellate court reinstated an 11-year-old lawsuit against Mr. Cohen’s former firm, which involves allegations that SAC conspired with other hedge funds to drive down the price of shares of Fairfax Financial, a large Canadian insurer. Fairfax is seeking billions of dollars in damages, claiming it was the target of a long-running scheme by hedge funds seeking to profit from a sharp decline in the company’s stock price.

 

And then there is “Billions,” the drama on the cable network Showtime that depicts a billionaire hedge fund manager doing battle with a federal prosecutor who is on a Captain Ahab-like quest to get his white whale.

 

Behind the scenes, the machinery for Mr. Cohen’s upstart hedge-fund-in-waiting quietly churns away.

 

He has selected one of his longtime employees, Perry Boyle, to run the new firm. Mr. Boyle runs Stamford Harbor in a building on the other side of the parking lot from Point72’s headquarters in Stamford.

 

Stamford Harbor currently manages $105 million of Mr. Cohen’s money; according to regulatory filings, he owns more than 25 percent of the new firm “through intermediate entities.”

 

At the Bellagio craps table, Mr. Cohen played for about 15 minutes before walking away — mostly likely to get away from the gaggle of onlookers who were beginning to gather.

 

Mr. Cohen left without speaking, but two women walked up to him and asked if he had won. A reporter could not hear his answer.

 

He was still wearing a purple glow stick around his neck, a souvenir from the Duran Duran concert he attended earlier in the evening.

[whatstheofficerproblem]

Didn't think the story was worth a separate thread, so putting it here. I'm a student so I applied to intern at some L/S funds of which Point72 is a part of. I got rejected, while my subpar school could be a reason, I heard even worse people got a case study. You see, on my resume I talk about how I have some investment ideas published on my own substack, SZ and TheCoBF, I even praise this forum in it's description. I wonder what part of me being a member here is the reason considering we have history with good old Steve.

 

Edit: If you work in HF space..... send me a DM .

Edited March 6, 2023 by whatstheofficerproblem

[John Hjorth]

@whatstheofficerproblem,

 

I consider you lucky not to have gotten into such professional and work environment.

Edited March 6, 2023 by John Hjorth

[Dinar]

3 hours ago, John Hjorth said:

@whatstheofficerproblem,

 

I consider you lucky not to have gotten into such professional and work environment.

A good friend has be been working at Point72 for a dozen years, and is very happy.  I would be careful about judging places based on newspaper articles.

[whatstheofficerproblem]

True. I think this is Cohen's big break, he started a structured fund where a lot of good talent is recruited, I guess that reflects in their returns. It's a multi-manager pod shop, kind of 'eat what you kill' business model, PMs get what they make. Point 72 also recently started Launch Point, which directly gives existing senior analysts seed money to start their own fund. From what I've heard, a much better workplace than Millennium and other MM Shops. 

 

Too late to ask about your friend for me @Dinar, unless he is a PM since I already took my L. Assuming you would even be open to that.

Edited March 6, 2023 by whatstheofficerproblem

[Dinar]

1 hour ago, whatstheofficerproblem said:

True. I think this is Cohen's big break, he started a structured fund where a lot of good talent is recruited, I guess that reflects in their returns. It's a multi-manager pod shop, kind of 'eat what you kill' business model, PMs get what they make. Point 72 also recently started Launch Point, which directly gives existing senior analysts seed money to start their own fund. From what I've heard, a much better workplace than Millennium and other MM Shops. 

 

Too late to ask about your friend for me @Dinar, unless he is a PM since I already took my L. Assuming you would even be open to that.

He runs a group.  What would you like?  Do you want to email me your resume so that I can forward it to him, or would you like something else?  As an aside, there is nothing wrong with not being from Yale/Harvard/Princeton/Wharton.  If I were in your shoes, I would do three things, a) contact alums from your school or high school that work in the industry; b) emphasize in your coverletter your strengths - for instance a good journalist certainly has very valuable skills for stock picking. c) Include a stock pitch

Edited March 6, 2023 by Dinar

[Cigarbutt]

10 hours ago, John Hjorth said:

@whatstheofficerproblem,

I consider you lucky not to have gotten into such professional and work environment.

What's the meaning of lucky and happy and is there a correlation?

Anyways back in the days when investing in Fairfax involved more than reading newspaper clips, there seemed to be a tension between some who wanted to get very rich very quickly and some who wanted to get rich relatively quickly. Sometimes, one has to sacrifice something when a change of pace is involved and despite some uncertainty, Fairfax withstood the attacks.

[mcliu]

Is this the same hedge fund? https://www.gawker.com/5419238/the-sick-orders-of-the-worlds-most-heinous-boss

[whatstheofficerproblem]

Not that I am defending anyone but SAC Capital and P72 are totally different. SAC Capital worked in a times where the markets were inefficient and the literal model for hedge funds was to hire managers and analysts with networks in gray area so they can obtain information and trade on it (technically insider) and that was the wild wild west of hedge funds era, the above article reflects it's times. Ironically this dark model was actually the foundation for what would later become institutionalized and turn into market neutral MM shops. The previous model actually made the employees liable while the CEO (Steve) was not touched, it's still the same now but the business model has drastically changed. In fact, P72 is highly sought after as their academy program is considered one the best training programs for students aspiring to enter HF space.

Edited March 7, 2023 by whatstheofficerproblem

[marcowelby]

For those who remember the Fairfax Bear short attack in the beginnings of the 2000's

 

 

https://oilprice.com/Energy/Energy-General/Is-This-The-End-Of-Naked-Short-Selling.html

 

https://www.wbny.com/Warshaw-Burstein-Prevails-Against-Major-Banks-and-Brokerage-Houses-Opposition

 

Finally, some justice after all those years I suppose.

 

I would like to take the opportunity to thanks the members of this group who kept the conversation rolling on the subject at the time and help me believe that  not only  I should not sell any of my Fairfax shares and convince me to buy more at bargain price ... an obvious wise decision in retrospect but not so evident at the time.

 

Marc

 

 

[dealraker]

There's all kinds of benefit from being associated with Fairfax that over time add up, but are so quickly forgotten.  Fairfax owned 40% of Hub, the broker, and investors in Fairfax could not have possibly been obvlivious to this although now it was long-long ago.

 

As I remember I made 5 or so times my money, a literally HUGE initial nvestment for me, in less than three years with that business.  It was sold to private money (or whatever you call it) but it was something you simply could not miss if you owned Fairfax.  An insurance broker growing at 15% with a PE under 10 is literally shocking, but it was right there for all of us.  I think this was in the go-go tech era, too many events for me to remember in my 69 year old brain.

 

Hang out with the wise men, not perfect but wise, and good things show up.  But you gotta be there to be aware.  

[Xerxes]

3 hours ago, dealraker said:

Hang out with the wise men, not perfect but wise, and good things show up.  But you gotta be there to be aware.  

And they even pay you $10 USD per share per annum for sticking around in the bar or the lobby waiting !

[Tommm50]

13 hours ago, marcowelby said:

For those who remember the Fairfax Bear short attack in the beginnings of the 2000's

 

 

https://oilprice.com/Energy/Energy-General/Is-This-The-End-Of-Naked-Short-Selling.html

 

https://www.wbny.com/Warshaw-Burstein-Prevails-Against-Major-Banks-and-Brokerage-Houses-Opposition

 

Finally, some justice after all those years I suppose.

 

I would like to take the opportunity to thanks the members of this group who kept the conversation rolling on the subject at the time and help me believe that  not only  I should not sell any of my Fairfax shares and convince me to buy more at bargain price ... an obvious wise decision in retrospect but not so evident at the time.

 

Marc

 

 

 

It would be great if it's enacted. I can't help but believe the massive fleets of HF lawyers will endlessly appeal an obviously correct ruling.

 

It's kinda depressing to note the Candian Stock Exchange is a hotbed of naked shorting. As Sanjeev can tell you, I've long felt that Fairfax's low multiple vs peers had more to do with short manipulation than "Mr. Market's" opinion. Long term holders recall Fairfax had the temerity to sue the hedge funds for manipulating their stock on the NYSE. Although it was 15 years ago it's hard to get off their black list once your on it.

 

Enough of my conspiracy theory...

 

 

[dartmonkey]

Long term holders recall Fairfax had the temerity to sue the hedge funds for manipulating their stock on the NYSE. Although it was 15 years ago it's hard to get off their black list once your on it.

 

Enough of my conspiracy theory...

 

 

It is one of the few things I don't like about Watsa. The right approach to short sellers is Buffett's: "Be my guest." The wrong approach is Watsa's, which he has fortunately dropped for at least 20 years now.

 

While it is true that Fairfax's share price has been depressed by short selling, it is not because someone has been shorting Fairfax; it is because someone at Fairfax has been shorting the index and tech high flyers, and that had catastrophic results. Fairfax's stock price continues to be unbelievably low, and I think this is primarily because many shareholders still remember those bad results from shorting, and are not yet giving Watsa the benefit of the doubt that he has actually seen the light and won't do it again.

[SafetyinNumbers]

3 hours ago, dartmonkey said:

Long term holders recall Fairfax had the temerity to sue the hedge funds for manipulating their stock on the NYSE. Although it was 15 years ago it's hard to get off their black list once your on it.

 

Enough of my conspiracy theory...

 

 

It is one of the few things I don't like about Watsa. The right approach to short sellers is Buffett's: "Be my guest." The wrong approach is Watsa's, which he has fortunately dropped for at least 20 years now.

 

While it is true that Fairfax's share price has been depressed by short selling, it is not because someone has been shorting Fairfax; it is because someone at Fairfax has been shorting the index and tech high flyers, and that had catastrophic results. Fairfax's stock price continues to be unbelievably low, and I think this is primarily because many shareholders still remember those bad results from shorting, and are not yet giving Watsa the benefit of the doubt that he has actually seen the light and won't do it again.

I try to think about it context. Shareholders were cheering the shorting at the time and rewarded Fairfax with a 1.3x BV multiple while they issued equity for the treasury and Allied World in 2016 which was the end of the shorting. They didn’t like the shorting in retrospect because it didn’t work out and book value growth stagnated for 7 years. The share count also went up ~35% over that period while revenues were up ~2.5x. It’s not surprising a lot of those newly issued shares were dumped in the following hears with Fairfax buying back more than half of them. 
 

I think a lot of people share your view and those who have been burned may not come back. I’m sure others are selling now because “it’s had a nice run” and they don’t want to own it for Prem’s next mistake. None of that matters as long as book value growth is double digits. With the float as big as it is and interest rates where they are, it’s hard to imagine that not happening over the next three years. Nothing is a guarantee as these are all probabilistic bets after all. If Fairfax executes, institutional investors will find it again and the multiple should increase. I think a lot of investors will miss out by selling too early trying to avoid a drawdown when the path for high growth in book value seems so promising. 
 

 

[Gregmal]

9 hours ago, dartmonkey said:

Long term holders recall Fairfax had the temerity to sue the hedge funds for manipulating their stock on the NYSE. Although it was 15 years ago it's hard to get off their black list once your on it.

 

Enough of my conspiracy theory...

 

 

It is one of the few things I don't like about Watsa. The right approach to short sellers is Buffett's: "Be my guest." The wrong approach is Watsa's, which he has fortunately dropped for at least 20 years now.

 

While it is true that Fairfax's share price has been depressed by short selling, it is not because someone has been shorting Fairfax; it is because someone at Fairfax has been shorting the index and tech high flyers, and that had catastrophic results. Fairfax's stock price continues to be unbelievably low, and I think this is primarily because many shareholders still remember those bad results from shorting, and are not yet giving Watsa the benefit of the doubt that he has actually seen the light and won't do it again.

There’s different approaches, but the issue isn’t that Fairfax was wronged by short sellers, it was. But Prem can’t really sit around complaining about short sellers when he himself is openly boasting about shorting stocks. If he’s off minding his own business, and the scummers attack his company, that’s when you go to war. But like Icahn recently with Hindenburg, or the Ackman Herbalife saga, when you play certain games, what goes around comes around, especially on Wall Street. 
 

Like many, I’m glad he’s moved on and is killing it sticking to his knitting.

Edited October 22, 2023 by Gregmal

[Parsad]

On 10/21/2023 at 6:03 PM, Gregmal said:

There’s different approaches, but the issue isn’t that Fairfax was wronged by short sellers, it was. But Prem can’t really sit around complaining about short sellers when he himself is openly boasting about shorting stocks. If he’s off minding his own business, and the scummers attack his company, that’s when you go to war. But like Icahn recently with Hindenburg, or the Ackman Herbalife saga, when you play certain games, what goes around comes around, especially on Wall Street. 
 

Like many, I’m glad he’s moved on and is killing it sticking to his knitting.

 

Prem and Patrick Byrne never complained about short-selling.  

 

They only complained about naked short-selling and coordinated attacks through certain analysts, media and hedge funds, who specifically created downward spiral attacks because they artificially increased the number of shares available as the DTC wasn't properly enforcing fail to delivers. 

 

I don't think any critic ever had an issue with short-selling itself...which is part of creating an efficient market.  Cheers!

[dartmonkey]

Prem and Patrick Byrne never complained about short-selling.  

 

They only complained about naked short-selling and coordinated attacks through certain analysts, media and hedge funds, who specifically created downward spiral attacks ...

 

 

Lots of people complain about regular old short "attacks" - Elon Musk comes to mind. The mature response is exemplified by Reed Hastings of Netflix who says people are welcome to short the shares but that they are miguided. Virulent attacks against supposed short 'attacks' usually come from CEOs that have something to hide. 

 

This distinction between 'regular' short selling and 'naked' short selling is really a distinction without a difference. Naked or not, it is hard to see how short sales could do anything to influence the medium- to long-term price of a company's shares. I suspect Watsa likes Byrne (and maybe knows him through Byrne's father, who was CEO of GEICO and whom Buffett has called the Babe Ruth of insurance). Maybe he wanted to show some sympathy for him, or maybe he was convinced by Byrne's arguments, and Overstock was Fairfax's #5 US holding as recently as 2016. But Byrne really is a nut, heavily iinto conspiracy theories of all sorts (not just 'naked shorting'), and I am glad to see the Overstock stake was dumped and there's been no more talk from Watsa about this odd character. (Although I see that Francis Chou bought 44000 shares last year, about $1m worth, down about 40% now, that's a bit weird.)

 

 

[Cigarbutt]

37 minutes ago, dartmonkey said:

...

Virulent attacks against supposed short 'attacks' usually come from CEOs that have something to hide. 

...

s73108-39.pdf (sec.gov)

Do you think Fairfax used legal abuse when they described and moved against "abusive" short sellers?

Don't be offended by my question because it was a relatively grey area but, at the time, on a net basis, it really seemed like the appropriate thing to do.

[Parsad]

1 hour ago, dartmonkey said:

 

This distinction between 'regular' short selling and 'naked' short selling is really a distinction without a difference. Naked or not, it is hard to see how short sales could do anything to influence the medium- to long-term price of a company's shares. 

 

 

 

Yeah, this is completely incorrect.  If you tell me your company has 2,000,000 shares outstanding, yet there is 5,000,000 shares trading, there is something pretty wrong there.  The DTC requires that shares are delivered to the recipient in T+3 days...there were times when OSTK's and FFH's shares had not been delivered in months...millions and millions of shares. 

 

With millions of artificial shares floating around, you could easily drive a company's stock price into the ground.  Even if the company has substantial cash on hand, they would not be able to buy back enough stock to keep it afloat without hindering working capital...unless the shares traded well below tangible cash and it was accretive...by that time, the company is into a death spiral because other investors start bailing.

 

Cheers!  

[Tommm50]

16 hours ago, Parsad said:

 

Prem and Patrick Byrne never complained about short-selling.  

 

They only complained about naked short-selling and coordinated attacks through certain analysts, media and hedge funds, who specifically created downward spiral attacks because they artificially increased the number of shares available as the DTC wasn't properly enforcing fail to delivers. 

 

I don't think any critic ever had an issue with short-selling itself...which is part of creating an efficient market.  Cheers!

 

Exactly.

 

I fear they're still doing it. It seems just before every positive quarter announcement the share price edges down so the bump on the news becomes incremental vs eye catching.  I promise to stop now.

[dartmonkey]

With millions of artificial shares floating around, you could easily drive a company's stock price into the ground.  Even if the company has substantial cash on hand, they would not be able to buy back enough stock to keep it afloat without hindering working capital...unless the shares traded well below tangible cash and it was accretive...by that time, the company is into a death spiral because other investors start bailing.

 

 

This would be a more convincing argument if you could think of one company where this kind of death spiral had actually happened. Death spirals stop because other investors see the opportunity to pick up cheap shares of a company that is fine, even if the shorted company itself doesn't have enough cash lying around to take advantage of the opportunity. In other words, there's no such thing as a death spiral. This is a good example of the kind of language that Byrne used to use but it is disconnected from reality.

[Parsad]

3 hours ago, dartmonkey said:

With millions of artificial shares floating around, you could easily drive a company's stock price into the ground.  Even if the company has substantial cash on hand, they would not be able to buy back enough stock to keep it afloat without hindering working capital...unless the shares traded well below tangible cash and it was accretive...by that time, the company is into a death spiral because other investors start bailing.

 

 

This would be a more convincing argument if you could think of one company where this kind of death spiral had actually happened. Death spirals stop because other investors see the opportunity to pick up cheap shares of a company that is fine, even if the shorted company itself doesn't have enough cash lying around to take advantage of the opportunity. In other words, there's no such thing as a death spiral. This is a good example of the kind of language that Byrne used to use but it is disconnected from reality.

 

The only reason the death spiral didn't continue at Fairfax was because Markel, Cundill and Southeastern lent them $300M.  No amount of bargain hunting would have stopped Fairfax from failing if it wasn't for that capital injection.  Same with OSTK...Fairfax stepped in.  In Fairfax's case, the negative press and analyst reports were making it difficult to find bank or debtor financing.  The only option would have been to try and issue massive amounts of stock to raise working capital.  

 

Whether you like to believe it or not...it happened.  We figured out who the players were before even Prem and Patrick did...but we didn't understand fail to delivers.  That's the whole reason why Prem started following the old message board.  I specifically called Trevor Ambridge who was handling investor relations for Fairfax at the time, and told him that someone was manipulating their stock after a bunch of us started putting the pieces together.  We knew Platinum Asset Management was involved.  We knew that Hempton was involved.  We knew that John Gwynn at Morgan Keegan was involved.  We just didn't know how deep it went to Exis, Loeb, Cohen, etc. 

 

And if it wasn't for that capital injection, they would have taken Fairfax down.  Cheers!

[Gregmal]

So Fairfax touched $900 this year, and now clownshop operator Chanos is out of business….solid year for the good guys. 

[Parsad]

3 hours ago, Gregmal said:

So Fairfax touched $900 this year, and now clownshop operator Chanos is out of business….solid year for the good guys. 

 

https://www.reuters.com/business/finance/short-seller-jim-chanos-close-hedge-funds-wsj-2023-11-17/

 

Bye, bye Uncle Jim!  That's what the hooker staying at his house used to call him

 

https://nypost.com/2008/03/16/eliots-gal-a-shared-asset/

 

Most of those shitheads got their comeuppance...a couple of them left like Cohen and Loeb.  Cheers!