Things do not appear to be getting any easier for Steven Cohen and SAC Capital. In a recent Fox Business scoop, Charlie Gasparino painted a bleak picture for the impending February 15th close of the hedge fund’s redemption window. It appears that many investors might be contemplating pulling their money from SAC, amidst a recent warning by the SEC that the fund could face civil charges over an insider trading probe.
SAC Capital is a Connecticut-based hedge fund that was founded in 1992 by Steven Cohen. The diversified hedge fund uses both fundamental and quantitative-based approaches. The hedge fund manages approximately $20 billion in assets (as of the end of the third quarter), of which it is estimated that near $7 billion is Cohen’s personal capital (see what Steven Cohen’s top moves have been).
Gasparino says that the February redemption date is one to keep a close eye on. He notes that high level executives at SAC have been holding one-on-one meetings with some of its largest shareholders in an effort to relieve concerns. The firm is assuring investors that it will likely pay a large fine but not be indicted. Gasparino still believes that “this is crisis mode,” adding that they “think there’s a very good likelihood they are going to get massive redemptions.”
Titan Advisors has already indicated plans to pull capital from SAC. Although Titan has checked out of Cohen’s fund, one of its largest investors–Blackstone Group–plans to keep its near $550 million position.
The real issue is: what do these possible redemptions mean? If SAC investors begin to walk away, the fund might have to sell off some of its major positions to subsidize.
Some of SAC’s biggest positions include Sirius XM Radio Inc (NASDAQ:SIRI), American International Group, Inc. (NYSE:AIG), Apple Inc. (NASDAQ:AAPL), eBay Inc (NASDAQ:EBAY) and Tiffany & Co. (NYSE:TIF).
SAC could consider selling off Sirius now that subscriber growth is expected to slow in 2013. The satellite radio company is forecasted to add 15% fewer subscribers this year versus 2012. Recent news also indicates the approval of Liberty Media to take De jure control of Sirius, giving it the power to elect the majority of the board of directors. From a valuation standpoint, Sirius trades above some of its notable competitors at 4.6x sales, compared to Saga Communications and Canadian Satellite Radio, both of which trade at 1.6x sales. Billionaire Jim Simons is alongside SAC as a top-name investor (check out Jim Simons’ big bets).
Continue reading to see some other stocks that may be in danger of a sale out of Cohen’s portfolio…