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The Morning Brief: SAC’s Employee Retention Scheme

It looks like Steve Cohen’s SAC Capital Advisors is preparing for life with few or no outside investors. The embattled Stanford, Connecticut firm is reportedly raising 2013 bonuses for portfolio managers by 3.5 percentage points. The higher payouts are being given to equity, macroeconomic and quantitative-trading portfolio managers. SAC also told its employees it will guarantee a minimum pay of $300,000 for equity analysts in 2014. The firm, which is facing criminal charges, is obviously hoping higher compensation will go a long way to retaining employees.


William Ackman’s Pershing Square Capital Management lost 3.6 percent in August, according to a Reuters report. As a result, it is only up 0.3 percent so far this year. Ackman was clearly hurt by his long position in J.C. Penney — which he recently exited — and his short position in Herbalife. The fund’s assets also reportedly fell to $10.73 billion from $12 billion.


Shares of J.C. Penney surged more than 6 percent to $13.49 after hedge fund titans Glenview Capital Management and Hayman Capital reported 9.1 percent and 5.2 percent stakes in the retailer, respectively.


Shares of Microsoft slumped more than 2 percent, to $34.27, after Morgan Stanley lowered its rating on the stock to Equal Weight, citing the proposed deal to buy Nokia’s devices and services unit and build Windows smartphone market share. While the bank calls it a good strategy, it tells clients it is a big risk. And with activist ValueAct Partners in the stock, Morgan Stanley asserts: “We see less room for the new CEO to enact major strategic changes, which may limit further sentiment improvement.”


The Credit Suisse LAB Index — which aims to reflect the performance of the overall hedge fund industry — fell 1.01 percent in August. It said performance was negative across all strategies within the index.

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