Inside Details on Steven Cohen’s Secretive SAC Capital Hedge Fund

NYT: SAC Capital Under Scrutiny

Mr. Cohen, 53, is among the world’s richest hedge fund managers, with a personal fortune estimated at $6 billion. In the 1990s, he gained fame as a rapid-fire trader with an uncanny sense of short-term market moves.

The firm’s stellar returns have driven its growth. Since 1992, SAC has produced average annual returns of about 30 percent, after fees, nearly four times the average return of the Standard & Poor’s 500-stock index, according to a person close to the fund.

The returns, and Mr. Cohen’s secretiveness, have fed the firm’s mystique and led competitors to question whether it bends the rules. But the former employees say the firm’s success rests on a relatively simple formula. Because its returns have been so high, SAC can charge investors hefty fees. It charges an annual fee of 3 percent of assets under management, and keeps 50 percent of the profits. Typical hedge funds charge 2 percent of assets and keep 20 percent of profits annually.

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