(Repeats to widen readership)
* Authorities reviewing trades by Plotkin, other managers
* Probe concerns trading in Weight Watchers in 2011
* Plotkin makes decisions involving $1.2 bln in assets
* Plotkin on SAC emails about Dell earnings
By Matthew Goldstein and Emily Flitter and Jennifer Ablan
NEW YORK, Dec 19 U.S. authorities are examining
trading by one of SAC Capital Advisors' most successful
portfolio managers, Gabriel Plotkin, as part of a probe into the
$14 billion hedge fund firm's investment in Weight Watchers
International Inc last year, according to a person
familiar with the investigation.
Plotkin, a specialist in consumer and retail stocks who
makes investment decisions for more than $1.2 billion worth of
assets, is among several SAC portfolio managers whose trades are
being investigated, said the source, who did not want to be
identified. The source would not name the other managers.
Federal authorities are trying to determine whether any of
SAC Capital's retail and consumer portfolio managers traded
Weight Watchers shares based on non-public confidential
information about the diet company, said the source and another
person familiar with the investigation.
The two sources said it is too soon to conclude if there was
any insider trading. Authorities have not charged Plotkin with
Plotkin, who is based in New York and works for SAC
Capital's Sigma Capital Management division, did not return a
request for comment.
"Gabe Plotkin has built a successful career on a commitment
to sound fundamental research," said an SAC Capital spokesman,
who declined to comment on the Weight Watchers probe.
With a hedge fund the size of SAC Capital, which was founded
20 years ago by Steven A. Cohen, it is not uncommon for many
portfolio managers to be trading the same stocks.
Last year, Plotkin and his team of a half-dozen traders and
analysts produced between $150 million and $200 million in
profits for Cohen's fund, some of which came from trades of
shares of Weight Watchers, said a person familiar with the hedge
fund, who declined to be identified because he is not authorized
to speak for SAC Capital.
Over the past two years, Plotkin, 34, has emerged as one of
the most successful portfolio managers at SAC Capital, said this
person. Plotkin and his wife own a condo on Manhattan's Upper
East Side, as well as a home in Southampton, which is part of
the Hamptons' summer playground for the city's wealthy.
The Weight Watchers inquiry, first reported by Reuters on
Dec. 7, is focusing on trading by SAC Capital in the first half
of 2011 when the Stamford, Connecticut-based hedge fund bought
and sold some 2.1 million shares during a period when the diet
company's stock price roughly doubled.
The probe is the latest in a long line of investigations by
federal authorities dating back to at least 2007 that have
looked into whether some of SAC Capital's outsized performance
is the result of trades relying on insider information.
A spokesman for U.S prosecutors in New York declined to
Plotkin is one of 11 portfolio managers at SAC Capital who
trade consumer and retail stocks. It is not clear how many of
those managers, all of whom manage less money than Plotkin, are
being scrutinized by federal authorities.
Plotkin, who came to SAC Capital in 2006 from North Sound
Capital, is widely known in the $2 trillion hedge fund industry
as one of the top consumer and retail traders, said several
people who know him.
Plotkin's name recently surfaced in several emails that
federal prosecutors introduced into evidence in a separate
insider trading case. In that case, Todd Newman, a former
portfolio manager at Diamondback Capital Management, and Anthony
Chiasson, co-founder of Level Global Investors, on Monday were
convicted of illegal trading in Dell Inc shares.
The emails involved discussions by Jon Horvath - a former
trader at SAC Capital's Sigma division who pleaded guilty in
September to trading on inside information - with his former
supervisor, Michael Steinberg, and Plotkin. The prosecutors used
the emails to persuade a federal judge to declare Steinberg an
uncharged co-conspirator for the purposes of the trial.
In the emails, reviewed by Reuters, there was a discussion
between Steinberg and Horvath about Dell's upcoming earnings.
These emails were also sent to Plotkin. In an August 2008 email
to Steinberg and Plotkin, Horvath writes he has a "2nd hand read
from someone at the company" about gross margins and earnings.
Steinberg, whose lawyer did not return a request for
comment, has not been charged with any wrongdoing.
U.S. prosecutors, the Federal Bureau of Investigation and
the Securities and Exchange Commission have been
gradually ratcheting up pressure on Cohen, 56, one of the hedge
fund industry's best-known managers.
Two weeks ago, U.S. prosecutors charged a former SAC Capital
employee, Mathew Martoma, with using inside information to
generate profits and avoid losses totaling $276 million in
shares of two drug stocks. Martoma has not entered a plea, but
his lawyer has said he expects to be exonerated.
The SEC also has formally warned SAC Capital that the firm
could face civil charges.
Martoma is the seventh person once associated with SAC
Capital to be either charged or implicated by federal
authorities in insider trading. Authorities have not charged
Cohen with any wrongdoing and the firm has repeatedly said it
has strong compliance measures in place.
The investigations have not had a visible impact on SAC
Capital's investor redemptions or employee turnover.
The investigation into trading in Weight Watchers comes as
federal authorities are also looking at trading by SAC Capital
in shares of bio-tech company InterMune in 2010. A person
familiar with the InterMune and Weight Watchers investigation
said authorities are looking into some of the trading done by
former SAC Capital portfolio manager Nikej Shah.
Shah, who left SAC Capital last year, did not return several
calls seeking comment.
InterMune declined to comment. Weight Watchers said it has
not been contacted about any investigation.
(Reporting By Matthew Goldstein, Emily Flitter and Jennifer
Ablan; Editing by Martin Howell and Steve Orlofsky)