Steven “Steve” Cohen, chairman and chief executive officer of Point72 (Photographer: Simon Dawson/Bloomberg)

The Hedge Fund Comeback That Wasn’t: Steve Cohen’s Mediocre 2018

(Bloomberg) -- It was supposed to be his big comeback.

Hedge fund titan Steve Cohen, who had been banned from trading client money for two years, opened Point72 Asset Management to investors amid fanfare. Anticipation that the man whose former firm, SAC Capital Advisors, had averaged annual returns of about 30 percent would be back in the game attracted $5 billion of capital to his fund, making it one of 2018’s biggest launches.

The Hedge Fund Comeback That Wasn’t: Steve Cohen’s Mediocre 2018

But by the end of 2018, Point72 had made less than 1 percent for investors, according to people familiar with the matter. The fund, which started trading last spring, lost about 1 percent in October and 5 percent in November, which largely wiped out its gains for the year.

A spokeswoman for the Stamford, Connecticut-based firm declined to comment.

Point72, which mostly trades stocks, fared well on a relative basis. It beat the S&P 500 Index, which fell 4.4 percent last year with dividends included, and the average hedge fund, which lost 6.7 percent as measured by the HFRX Global Hedge Fund Index. Still, the numbers weren’t the blockbuster performance many had expected.

ExodusPoint Returns

It also wasn’t the only 2018 mega-launch to eke out modest early returns. Michael Gelband’s ExodusPoint Capital Management, which raised $8 billion -- the most money ever for a hedge fund launch -- made about 0.6 percent in the seven months since it started trading in June.

Cohen reappeared on the hedge fund scene as soon as his ban expired. In 2013, SAC pleaded guilty to securities fraud and paid a record fine as part of a U.S. crackdown on insider trading on Wall Street. Cohen wasn’t charged with wrongdoing, but he has been working to rebuild his reputation. The billionaire turned SAC into a family office managing his fortune, calling it Point72. The firm has since ramped up its compliance efforts, boasting a 50-person team that monitors emails for suspicious language and can veto job candidates.

The road to the launch was bumpy as well. Since mid-2017, Point72 saw a number of senior departures. In early 2018, the firm reconsidered plans to lock up capital for as long as three years after the proposed terms made some investors wary. Point72 was also scrutinized over what some call a “boys’ club” culture where women were discriminated against.

©2019 Bloomberg L.P.