Steven Cohen's SAC Capital 13F Filing: Q4 2008 ~ market folly

Wednesday, April 8, 2009

Steven Cohen's SAC Capital 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is SAC Capital, founded by Steven Cohen. Taken from their website, “SAC is a multi-strategy, private asset management firm founded by Steven A. Cohen in 1992 with 9 employees and $25 million in assets under management. As of July 2008, the firm has grown to over 800 employees with approximately $14 billion in assets under management. SAC's initial investment style was "trading" oriented. However, we have evolved into a multi-strategy, multi-disciplinary, investment management firm emphasizing rigorous research and risk management practices. SAC's investment strategies include, but are not limited to: Fundamental and Technical Long/Short Equity Portfolios, Global Quantitative Strategies, Fixed Income and Credit, Global Macro Strategies, Convertible Bonds, and Emerging Markets.”

Since inception, their funds have returned on average 40% annually, which explains how they can charge a 50% performance fee to investors, compared to the normal 20% that most hedge funds charge. In terms of recent performance, SAC was +3% for March 2009 and sits up around 10% year to date. Stevie Cohen was recently on Forbes' billionaire list, as well as the top hedge fund manager losers of 2008, due to the rough year they had. And, if you're curious, you can see a picture of Cohen's house here.

Disclaimer: SAC are very active traders and at any given time can account for up to 3% of the volume on the New York Stock Exchange and up to 1% on the Nasdaq. As such, we are merely tracking their portfolio for fun and for entertainment purposes only. A lot of readers request the info just out of curiosity, so here it is. We do not recommend using their portfolio for investment ideas etc. The funds we typically track have longer investment timeframes and are more appropriate to track over time. SAC on the other hand trades so frequently that we are merely posting this for fun.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
Teva Pharma (TEVA), Honeywell (HON), Sotheby (BID), Exxon Mobil (XOM) Puts, Exxon Mobil (XOM) Calls, Life Technologies (LIFE), Starbucks (SBUX), St Jude (STJ), Occidental Petroleum (OXY), Steel Dynamics (STLD), Range Resources (RRC), Weatherford (WFT), Harsco (HSC), Advance Auto Parts (AAP), CH Robinson (CHRW), Clean Harbors (CLHB), United States Oil Fund (USO) Calls, Exterran Holdings (EXH), Praxair (PX), Fastenal (FAST), Agilent (A), Bank of NY Mellon (BK), Wendy's Arby's (WEN), Wyeth (WYE), Fedex (FDX), Duke Energy (DUK) Calls, Monsanto (MON) Calls, HMS Holdings (HMSY), Puget Energy (PSD), AmerisourceBergen (ABC)

Some Increased Positions (A few positions they already owned but added shares to)
Vale (RIO): Increased by 2,031%
SPDR S&P500 (SPY) Puts: Increased by 1,440%
SPDR S&P500 (SPY): Increased by 740%
Liberty Media (LMDIA): Increased by 656%
F5 Networks (FFIV): Increased by 257%
Ishares Australia (EWA) Calls: Increased by 100%
Schlumberger (SLB) Calls: Increased by 84% (CRM): Increased by 27%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Dominion Resources (D) Bond: Reduced by 53%
US Bancorp (USB) Bond: Reduced by 53%
Qwest Comunication (Q) Bond: Reduced by 50%
Marathon Oil (MRO): Reduced by 20%

Removed Positions (Positions they sold out of completely)
Hutchinson Technology Debt, Exult Debt, Valeant Pharma Bond, Carnival Bond, Chesapeake Energy Bond, Adaptec Bond, Prudential Financial Bond, Red Hat Bond, Imclone Bond, Transocean Debt, Affymetrix Bond, Watson Pharma Bond, Agere Systems Debt, Sepracor Bond, Novell Bond, Barr Pharma (BRL), Service Corp (SCI), Quanta Services (PWR), US Steel (X), Celanese (CE), SPX (SPW), Republic Services (RSG), Ishares S&P100 (OEF) Calls, Powershares QQQ (QQQQ) Calls, Las Vegas Sands (LVS), Invitrogen (IVGN), Genzyme (GENZ), Alpharma (ALO), Flowserve (FLS), Whiting Petroleum (WLL)

Top 15 Holdings (by % of portfolio)

  1. Laboratory Corp (LH) Bond: 5.34% of portfolio
  2. Danaher (DHR) Bond: 4.83% of portfolio
  3. Hasbro (HAS) Bond: 4.45% of portfolio
  4. Cymer (CYMI) Bond: 2.48% of portfolio
  5. Telebras (inactive) Bond: 2.33% of portfolio
  6. SPDR S&P 500 (SPY): 2.13% of portfolio
  7. SPDR S&P 500 (SPY) Puts: 2.01% of portfolio
  8. Teva Pharma (TEVA): 1.96% of portfolio
  9. Dominion Resources (D) Bond: 1.57% of portfolio
  10. US Bancorp (USB) Bond: 1.35% of portfolio
  11. Chevron (CVX): 1.3% of portfolio
  12. USF&G (inactive) Debt: 1.29% of portfolio
  13. Omnicom Group (OMC) Bond: 1.25% of portfolio
  14. Qwest Communications (Q) Bond: 1.2% of portfolio
  15. Vale (RIO): 1.17% of portfolio

Just like when we covered Renaissance's portfolio yesterday, we are not going to attempt to explain the rhyme or reason behind SAC's picks. We can't gauge why they are in them, nor do we know how long they will be holding them. As such, take everything with a grain of salt due to their trading nature. However, one thing you can't help but notice is their tendency to gravitate towards bonds; the majority of their top holdings are bonds/debt. Their assets listed in the 13F essentially got chopped in half, due to some combination of poor performance, decreasing equities/bonds/options exposure, and some redemption requests. Assets from the collective long US equity, options, and note holdings were $7.7 billion last quarter and were $3.45 billion this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered:

We cover a new hedge fund each day and you can see the complete list of hedge fund portfolios here.

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