Nearly three years ago, following the publishing of “Is The SEC’s Insider Trading Case Implicating FrontPoint A Sting Operation Aimed At S.A.C. Capital?” which exposed the key biotech aspect of SAC’s insider trading strategy, and which linked SAC, and the hedge fund world in general, to expert networks three weeks before virtually anyone outside of the 2 and 20 (or 3 and 50 as the case may be) world had heard of them and befre they became a household euphemism for insider trading information, we expected the full rabid fury of the world’s best paid legal team to fall upon us. It didn’t, which meant only one thing: we were correct, or they had bigger problems on their mind. Turns out it was both.
In the months and years following our publication, what we speculated has become fact, and as Vanity Fair’s Bryan Burroughs reports, some 71 people have now been convicted or admitted guilt in the case of the government vs Stevie Cohen.
But the final blow against the formerly infallible hedge fund that redefined the concept of “information arbitrage”, and whose track record was almost as successful as that of Bernie Madoff, came from Blackstone, which as Reuters reported moments ago, has decided to pull all its money from SAC, which is the official end of SAC as an outside investment asset management operation. Because once the fund of funds operator, and the largest outside investor in SAC, votes no confidence in Cohen, it’s game over, and at best SAC may remain as a family and employee-funded office, assuming of course the DOJ doesn’t actually decide to demand restitution for years and decades of insider trading.
Actually, one outside investor may remain: the always amusing Anthony Scaramucci, head of the PR company, which has an occasional FOF operation, SkyBridge Capital. From NYT:
A group of Mr. Cohen’s investors continue to stand by him and hope that he stays in business. For Anthony Scaramucci, chief executive of the hedge fund firm SkyBridge Capital and a friend of Mr. Cohen’s, sticking with SAC has as much to do with friendship and loyalty as it does its superior performance.