Steven A. Cohen is an American investor and hedge fund manager. He is the founder and CEO of Point72 Asset Management, a family office located in Stamford, Connecticut. As of April 2022, he has an estimated net worth of $17.4 billion.
Cohen is also the founder of the now-defunct SAC Capital Advisors, one of the most successful hedge funds ever. In 2010, the company became the subject of an insider trading investigation launched by the Securities and Exchange Commission (SEC).
While Cohen was never charged, the firm pled guilty to trafficking in nonpublic information and was forced to return investor capital and pay $1.8 billion in fines. SAC was officially closed in 2016 when Cohen began serving a two-year ban on managing other investors’ money. The ban expired in January 2018.
- Steven A. Cohen is an American billionaire hedge fund manager and investor known for employing high-risk, high-reward trading strategies.
- Cohen began his investment career working as a trader for Gruntal & Co., where his trading generated substantial returns for the company and himself.
- Cohen's flagship hedge fund, SAC Capital, was shut down following allegations of insider trading, and the fund was forced to pay nearly $2 billion in fines.
- Following the demise of SAC, Steve Cohen was prevented from professionally managing investor money until 2018; at that point, he opened Point72 Asset Management.
- SAC Capital's portfolio manager, Matthew Martoma, was convicted of insider trading and sentenced to nine years in prison.
Early Life and Education
Steve Cohen was born in 1956 to a middle-class family of 10 in Great Neck, NY. His father worked as a dress manufacturer, and his mother was a homemaker. After high school, Cohen left New York to attend the University of Pennsylvania’s Wharton School of Business, where he graduated in 1978 with a degree in Economics.
After college, he began work as a junior options trader for boutique investment bank Gruntal & Co. By 1984, he was managing a trading group at the company. During his tenure with Gruntal & Co., Cohen’s trading routinely generated $100,000 a day for the firm and helped him build substantial personal wealth. In 1992, he launched his hedge fund, SAC Capital Advisors.
Showtime's tv show Billions is inspired by Steve Cohen's life.
Founded with $25 million of Cohen’s money, the firm initially used an aggressive, high-volume trading approach to investment management. Stock positions were held for 2-30 days, or in some cases, hours. In 1999, Cohen suggested that SAC regularly traded 20 million shares per day. By 2006, the firm’s trading accounted for 2% of all stock market trading activity.
Over two decades, SAC evolved and expanded its investment approach, using multiple strategies, including long/short equity portfolios, fixed income, and global quantitative strategies. From 1992 to 2013, SAC averaged annual returns of 25% for their investors.
Cohen’s success with SAC was predicated on high-risk, high-reward trades. His portfolio rode the late-’90s dot-com bubble to 70% returns and earned another 70% when he shorted those same stocks when the tech-bubble burst in 2000. In 2007, SAC took a $76 million stock position in Equinix. After the company released positive earnings a month later, its share value grew by 32%.
At the beginning of 2012, Cohen made a $26.7 billion bet on Ardea Biosciences. When AstraZeneca made a deal to purchase the company three weeks later, the acquisition increased Cohen’s position on Ardea to almost $40 billion.
The number of shares SAC bought and sold daily.
SAC took long positions in Whole Foods in 2009 and 2010 for $49 million and $78 million, respectively. Both times, as a result of favorable operational changes made within the supermarket chain, the stock price soared.
Conversely, the firm also sustained several significant losses on the bets it made over two decades. A series of multimillion-dollar long positions made throughout the 2000s on pharmaceutical companies, including ImClone Systems and Human Genome Sciences, was ultimately unsuccessful and costly to the portfolio.
SAC Capital's Downfall
In 2008, SAC accumulated a $700 million long position in pharmaceuticals Elan and Wyeth, which were in joint development of a drug to treat Alzheimer’s disease. When the companies announced the disappointing result of their second phase of clinical trials, both stocks plummeted. But SAC Capital didn’t share in the loss. In the week prior, Cohen had not only liquidated SAC Capital’s nearly $750 million positions in Elan and Wyeth but shorted the stocks. Betting against the companies earned him a profit of $276 million.
In November 2012, the SEC indicted Mathew Martoma, a former SAC Capital portfolio manager, for insider trading. The SEC alleged that Martoma received information about the Elan and Wyeth clinical trials before the details were released to the public and used that information to advise Cohen to sell out of the position. United States Attorney Preet Bharara, who brought charges against Martoma in Federal Court, referred to the incident as “the most lucrative insider trading scheme ever.”
Martoma was convicted, sentenced to nine years in prison, and ordered to return $9 million in wages. Cohen, however, was never charged. A civil suit brought against him by the SEC for failing to reasonably supervise a senior employee was dropped in 2013.
In total, eight SAC employees were found guilty of insider trading from 1999 through 2010, including portfolio manager Michael Steinberg, who was also convicted and sentenced to prison for insider trading. However, an appellate court later dismissed the charges against him.
SAC Capital was also charged and subsequently pled guilty to insider trading. In addition to a $900 million criminal penalty and $1.8 billion in financial penalties, the settlement included terms that barred Cohen from managing the assets of other investors. In 2014, he converted his investment operations from SAC Capital to Point72 Asset Management. In January 2018, the firm was granted regulatory clearance to raise and manage outside capital.
How Did Steve Cohen Make His Money?
Steve Cohen is an American billionaire and hedge fund manager. He is the founder and CEO of hedge fund firm Point72 Asset Management, as well as the now-defunct SAC Capital.
How Much Is Steve Cohen Worth?
As of April 8, 2022, Steve Cohen's net worth is approximately $17.4 billion. He ranks 48 on the Forbes 400 list of the wealthiest Americans and 96 on the Forbes World's Billionaires list.
How Much Did Steve Cohen Pay for the Mets?
After being a minority owner for eight years, Steve Cohen paid $2.4 billion in 2020 for a controlling interest in the New York Mets baseball team.
The Bottom Line
Steve Cohen is an American billionaire and famous hedge fund manager. Cohen is the founder of SAC Capital, a hedge fund firm that enjoyed more than two decades of success until found guilty of numerous infractions and ordered to terminate operations. However, after years of legal entanglements and the closing of his first company, Cohen founded Point72 Asset Management, a hedge fund company worth $16 billion as of 2022.