Stephen Cohen grew up in Great Neck, New York State, in the family of a clothing manufacturer and a piano teacher. The family was big and noisy. Cohen thinks, that it was here that he learned to concentrate on the main. And in cards, and at school Cohen did well. “In the mornings, he often had bundles of hundred-dollar bills on his desk.”, – recalls Donald, 47-summer accountant from Florida. “I've learned to take risks through poker”, – says Cohen. At the University of Pennsylvania he studied economics, played poker and became interested in the stock market. He opened an account with a brokerage firm Gruntal and put there $7000, intended for tuition fees. At the brokerage office closest to the hostel, he followed the market and, thanks to several transactions, earned enough, to pay all bills. IN 1978 G. Cohen took a job at Gruntal, where on the first day I earned for the company 8 000 $. Ultimately Cohen did approximately 100 000 $ a day for the company, to 1984 he managed a portfolio in $75 million and a group of six traders. There were transactions on his account, who helped Gruntal cover losses, incurred due to transactions of other traders.
IN 1992 G., left Gruntal, Cohen opened a hedge fund, investing there $20 million own funds (today the firm manages more than 12 billion $). The hedge fund industry was still relatively small at the time., and the bull market of the 1990s was just warming up. Many were confused by the high payment for services, which he demanded from investors, therefore, the new fund was able to attract only $13 million from third-party investors. A dozen traders and portfolio managers, housed in a small office on Wall Street, managed to double the company's assets in a year and earn about 17,5% per annum. TO 1995 G. SAC assets quadrupled. Cohen moved headquarters to Stamford and began opening branches. He developed a special computer program, allowing tracking of undervalued or overvalued stocks.
Although SAC currently has more than 600 human, Stephen Cohen still makes deals on his own. With 8 from morning to evening, he does not look up from his monitors, and the share of transactions performed by him accounts for about 15% company profits. So that all traders can see, what he does and what he says, video camera and microphone always aim at Cohen. Many just copy his actions., and Cohen's frequent sarcastic statements are called "stevisms".
In the trading hall of the American SAC Capital Advisors with an area of almost 2000 kV. m very quiet and cool. Stephen Cohen, seated in the center at a table with eight computer monitors, loves this kind of environment. The phones are flashing here, but don't call. Computers are located on another floor, so that their fans do not make noise. Traders watch Cohen nervously, waiting for orders from the king of the hedge fund industry.
The market was falling fast that day, but Cohen never sold the stock, fixing a loss at the end of the trading $150 million – 1,5% of total assets, run by his company. Although in the old days in a falling market, Cohen could sell large blocks of shares at a very high speed. His fame in the hedge fund world has eclipsed even such influential managers., like george Soros and Julian Robertson Jr.. Cohen Learned To Make Huge Profits From Market Fluctuations, and his success inspired many on Wall Street to start their own hedge funds.
“The times of playing fast operations are over”, – says Cohen. About 7000 hedge funds are now competing for investment ideas, which means, opportunities to earn significantly decreased. “Now it’s very hard to find ideas, which someone has not used already, it's hard to make big profits and be different from others, – complains Cohen. – New times have come ”. The situation in the stock market is also changing: no more low interest rates and low inflation.
Stephen Cohen, recently celebrated its 50th anniversary, He speaks, that his strategy is changing – he began to buy larger blocks of shares and hold them longer. Crush, established by competing hedge funds, in his opinion, threatens the market with collapse. Cohen fears, that competitors are buying the same shares, that his foundation. If all hedge funds start selling them at the same time, the market will start an unexpected and very fast fall. “There will be a really strong market decline, which will lead to the disappearance of many hedge funds ", – predicted by one of the best traders in the world. “Hedge funds got bigger, the volumes of their positions have grown significantly. Can we get out of stocks?, when everyone around starts selling?” – worried Cohen.
Hedge fund assets have more than doubled over the past five years to about $1,2 trillion, and big profits are rare. IN 2005 G. hedge funds earned on average 9,3% per annum, which is below the average profitability over the past decade – 11,4% according to Chicago-based Hedge Fund Research. For comparison: index return S&P 500 in 2005 G. amounted to 7,7%. Last year, hedge funds set a kind of anti-record – 848 funds closed due to poor performance.
Stephen Cohen uses an investment style in his work, completely opposite to the style of Warren Buffett, who buys shares for a long time. Cohen is sure, what, closely following the changes in quotes during the day, can be predicted, how the shares will behave in the coming hours and days. For many years he bought and sold stocks of companies., sometimes without knowing any of their financial indicators, not even the field of activity. Classic investors like Buffett are confident, what is absolutely not important for a real investor is, what other traders do and think. Stephen Cohen – complete opposite. In black jeans and a worn sweater, often with dark circles under the eyes, he sits all day in the office in front of monitors and, watching the market, makes deals – sometimes by 300 in a day. Traders supply him with tons of information about, what's going on in the market, and he is able to absorb all of it.
SAC accounts for about 2% stock market transactions. On average, SAC pays brokers a commission of one cent per share, so at the end of the year the amount of the commission exceeds $400 million. Cohen's oldest foundation, launched in 1992 G., – SAC Capital Management LP brings investors on average 43,5% even after, how Cohen and his partners are taking their unusually high share of the business. Traditionally, managers receive 20% from profit, as well as an annuity in the amount 2% from assets, but Cohen gets 50% profit and 3% annuity. The fortune of one of the best traders in the world is estimated at about $3 billion, and he did not refute this assessment.
IN 1998 G. Stephen Cohen and his second wife Alex (to her 42 of the year) bought for $14,8 million mansion in Greenwich, Connecticut. There is a vegetable garden here, where organic vegetables grow, basketball court, golf course, regular garden, indoor pool, outdoor ice rink, home theater on 20 places. The lobby of the cinema is decorated with a map of the starry sky, what it was 16 years ago on their wedding night. About $700 million Coens spent on art. They placed a sculpture by Kate Haring in front of the house. – three dancing figures made of aluminum. The library has a painting by Jackson Pollock behind $52 million, in the living room – works of van Gogh and Gauguin, recently bought for $100 million, in the lobby – Andy Warhol and Roy Lichtenstein.
Cohen calls himself a cynic and loves to laugh at himself. He says, that he is actually a simple guy. He likes to eat at the local Top Dog eatery and watch reality TV shows.. "I am not a recluse, but not a party-goer either. I have seven children, and they need to make time, – he says. – I am not an introvert, but I'm a little afraid of the press, which can easily turn something very beautiful into absolutely terrible ".
“I don’t need such a big house, – argues Alex. – But you know, and why not?? What's wrong with that, that children have a place to play?”There is a cook in the house, housekeeper, family secretary, nanny, Cohen's personal trainer and driver, who works part-time as a bodyguard. The driver also looks after four dogs.
Cohen says, that his working day starts on Sunday evening, when he is talking on the phone with managers about the strategy for the coming week. He drives a black Chevrolet Suburban from Greenwich to Stamford in the mornings., to SAC headquarters – modern steel and concrete building with glass facade, overlooking Long Island Bay. There are also art objects here, for example, the sculpture "I myself" – human head, sculpted from a piece of frozen blood by artist Mark Quinn. Alien in Japanese school uniform with briefcase, creation of Takashi Murakami, located next to Cohen's desk. “I like funny things, – he explains. – I like to look at the reaction of visitors.. Art is the best distraction from numbers ”.
SAC's finest hour came at 1998 G., when large hedge fund Long-Term Capital Management went bankrupt, and stock prices began to fall. From late August to mid-October, Stephen Cohen was a full-time office worker, placing bulls on the Globex 24/7 trading system. Based on the results of 1998 G. SAC is working 49,2%, while on average hedge funds received 2,6% per annum. “At the end of the year, people understood, that something special is happening with SAC ”, – says George Fox, invested in SAC for 10 years. IN 1999 G. SAC assets increased to $1 billion. Cohen expanded his staff and broadened his investment topics, taking up, in particular, currencies. He hired psychologist Ari Kiev, to help traders overcome their fear of risk. "Many, trading shares, too worried about a possible loss ", – says Kiev. They, who couldn't handle this feeling, lost their jobs quickly.
IN 1999 And 2000 yy. SAC earned for investors 68,1% And 73,4% respectively. And then the company faced the problem of the emergence of hedge funds, exactly copying her business model. Another problem was the suspicion that, that one of the best traders in the world receives information before others and manages to make deals ahead of the whole market. According to critics, the huge turnover of SAC has led to, that the foundation was among the favorites on Wall Street and therefore the first to receive the necessary information. The manager of the Swiss bank UBS once told Cohen during a visit to the SAC office: "We know, what type are you ". According to Cohen, he kicked him out the door and didn't work with UBS for months.
As Stephen Cohen's star rose, Soros and Robertson's stars were setting. IN 2000 G. Robertson returned money to investors of his Tiger Management fund, and Soros reduced his participation in the Quantum Fund. “We traded more, than invested, and people didn't like it, – says Cohen. – But then they saw, that i make money, and began to copy me ". Nevertheless, he manages to earn more than competitors.. For example, in August of this year, SAC received a yield of 18%, although the average for hedge funds was just over 7%. Last year, SAC collected $2 billion to the new fund, moreover, many who wanted to invest in it had to be refused. Stephen Cohen says, that due to the need to make larger transactions, he is forced to hold shares for longer. He promises SAC investors from 10% to 15% per annum.
