SAC Rips It In 2006: I Told You So!

Remember in mid-September, when Stevie Cohen was the subject of a big story in the Wall Street Journal in which he was practically pessimistic about the likelihood of putting up big returns given the increasingly crowded and competitive environment? I posted on this two days later, in which I basically said: this is a load of crap. Steve and his team at SAC are a bunch of forward-looking rock stars with great brains, great technology and the resources and vision necessary to stay a step ahead. Don't believe me? Here are excerpts of what I wrote on September 18th, 2006:

This does not sound like a multi-billionaire running an eleven figure sum for some of the most powerful investors in the world. Where's the hubris? What has changed? Is he right that the easy money has been made and it will be tougher sledding from this point forward?

I'm not buying any of this. SAC and its team is way, way too smart to be pigeon-holed by a single strategy. If there is too much money chasing too few ideas, invariably there is a lot of dumb money out there that can be exploited by someone smarter and more experienced. I mean, come on, he is up 18% YTD on a big, big number. That is pretty good based upon the stats I've seen.

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Given the trend towards more and better data and information being put out there on the Internet, it will be those with the vision, the brains and the tools to take advantage of this alternative data set that will establish a true edge on the competition. Again, SAC is a very forward-looking organization with the resources and trading acumen necessary to exploit the massive opportunity for discovery that is the Internet, so I am also certain that they will lever their expertise into this area as well.

So, from my vantage point things don't seem so bad for Stevie. Maybe he is showing his soft side so we'll all get complacent and he'll clean our clocks! That seems far more likely than the defeatist attitude on display in the WSJ article.

So now the numbers are in: Stevie and Co. put up 34% (on $10+ very, very large) during 2006 vs. 12%-14% for most of the hedge fund indexes.  So who was right - me or Stevie? Answer? ME! But he's taking home 10 figures and I'm taking home - well, let's just leave it there. I appreciated his humility and willingness to let us all inside the tent a bit, but at the end of the day he is a smart, resourceful, competitive performer at the top of his game, and there is no doubt in my mind that he is ultimately confident in his ability to find new and improved ways to make money, regardless of the environment (and regardless of what he says). Thought he shaded it during his interview, I called bullshit. Hooray for me. And hooray for him.