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The Morning Brief: SAC Posts Gains in Final Year as a Hedge Fund

It’s the end of an era. For the first time since launching Stamford, Connecticut-based SAC Capital in 1992, Steven Cohen will no longer be permitted to manage money on behalf of outside clients due to his firm’s seminal $1.2 billion settlement with the government stemming from charges it engaged in insider trading. In his final year as a hedge fund manager before becoming a private investor, Cohen is said to have posted a better-than 20 percent gain in 2013, which no doubt will land him on the Rich List for the twelfth time in 13 years.

Cohen’s woes also extend to the real estate market. According to the New York Times, Cohen recently cut his asking price for a Manhattan duplex apartment by $17 million, to a mere $98 million. The One Beacon Court apartment, with a breathtaking view of Central Park, reportedly has four bedrooms, five and a half bathrooms, Venetian plaster walls and stainless steel surfaces. This is the latest asset dump for Cohen, who in November sold about $88 million of art at a Sotheby’s auction.

Meanwhile, Cohen continues to invest his own money. And on Tuesday SAC Capital disclosed it owns 5 percent of the shoe company Crocs. SAC said it is a passive investment.

Is Hertz Global Holdings the latest company to find itself in the cross-hairs of activist investors? The car rental giant’s stock surged more than 10 percent on Tuesday after it reported adopting a one-year shareholder rights plan. “Hertz has observed unusual and substantial activity in the company’s shares,” the company stated late Monday in making the announcement. “This rights plan is intended to ensure that the board remains in the best position to perform its fiduciary duties and to enable all Hertz shareholders to receive fair and equal treatment.”

Interestingly, the stock’s average daily volume is slightly less than 10 million shares. Yet until Tuesday, it had only hit that level once since mid-November. But Bloomberg reports the company has noticed unusual activity in trading of its options and believes more than one activist investor has used options to build its stake. Almost immediately, speculation about who the potential activist investors are was rampant. One name that surfaced Tuesday was Daniel Loeb’s New York–based firm, Third Point, which CNBC reported took a stake of less than 5 percent but has no plans to take an activist role. CNBC also reported that Corvex Management’s Keith Meister actually met with Hertz management. Observers found it curious that a major company’s board would meet — even over the phone — to discuss and implement something as significant as a poison pill. It is also interesting that Hertz has become an activist target given its astounding performance. Its stock surged about 50 percent in 2013 and is up more than 12-fold since March 2009.

Alan Howard’s BH Macro Ltd., which invests substantially all of its assets in the Brevan Howard Master Fund Limited, rose 0.63 percent last month through December 27. This means with just two trading days left in the year, the London–based fund, managed by Brevan Howard Asset Management, was up just 2.93 percent in dollar terms and 3.33 percent in British currency. It made nearly half its gains in its dollar shares in November alone when it was up 1.33 percent, thanks mostly to gains in equity macro trading and to a lesser extent in foreign exchange trading and in euro interest rate trading, according to BH Macro’s November report to investors.

Oracle Partners’ Larry Feinberg, who specializes in health care investments, disclosed a passive, 5.6 percent stake in NxStage Medical, a medical device company that makes systems for the treatment of end-stage renal disease, acute kidney failure and fluid overload.

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