This is part of a special report on SAC Capital Advisors, LP that can be seen here:
Feb 23 (Reuters) - In the 19 years since Steven A. Cohen used about $25 million to start his own hedge fund, SAC Capital Advisors has grown into a $13 billion behemoth, one of the industry’s biggest and most powerful. Cohen, known for pushing his staff hard, is equally tough on himself. He puts in long hours on his 20,000-square-foot trading floor, which is cooled to around 69 degrees to keep employees wide awake, wooing potential investors over a round of golf or intimate dinners, and reviewing many job applications personally.
Here is a list of little-known facts about Cohen’s 800-employee business.
* Cohen located his Disaster Recovery data center in the village of Wappinger Falls, population 5,000, roughly 65 miles (105 km) northwest of the firm’s Stamford, Connecticut headquarters. To make sure no data, including email, is ever lost, the site is on a different power grid from the Stamford and New York sites and has an uninterrupted power supply with an emergency generator.
* Sticking with the idea of not having all his eggs in one basket, Cohen uses five prime brokers -- Goldman Sachs, Morgan Stanley, Credit Suisse, JPMorgan and Barclay’s Bank -- more than the two or three prime brokers most other fund firms use.
* PricewaterhouseCoopers LLP has combed through the books of SAC funds since 1994 as the firm’s official auditor.
* SAC manages over seven dozen portfolios with SAC Capital Associates being both the oldest continuously active portfolio and its largest current portfolio, the firm said in 2009.
* While SAC stands for its founders initials, the man doesn’t work alone. In his seven offices around the world, he employs over 90 portfolio managers, 130 research analysts, more than 30 trading execution specialists and more than 30 people in compliance and due diligence.
* Like other hedge fund firms, SAC incorporates its offshore funds on tropical islands with five organized in the Cayman Islands, where the bulk of the world’s hedge funds are located. But SAC also located eight portfolios in Anguilla, where fees are generally lower.
* While Cohen himself may be eager to save where he can, he’s not bashful about making his clients pay some of the highest fees in the hedge fund industry that investors say amount to a roughly 3 percent management fee and a roughly 50 percent performance fee. Several investors said they “hate” the high fees but are sticking with him for now.
* Just in case something should go wrong, SAC says it has investment advisor/investment fund management and professional liability insurance with coverage of about $30 million.
* The firm says that its funds employ “significant leverage” which allows them to magnify their exposure and lists a ratio of 3-4 to 1 for funds pursuing long/short equities strategies. The S.A.C. Select Fund, LLC (long/short equities with lower net exposure) employs leverage of 5 to 1 and quantitative equities use leverage of 8 to 1.
* Over the years, Cohen has attracted hundreds of wealthy clients as well as powerful institutional investors such as the Blackstone Group’s fund of funds unit, whose investments can often bestow a sort of seal of good housekeeping on a firm. Others investors include Hatteras Funds, and Infinity Capital Partners.
* When he’s not working, Cohen can relax at his 36,000-square-foot home, shooting hoops on his basketball court, swimming in an indoor pool, or turning figure eights on an ice skating rink.
Sources: SAC marketing information and due diligence questionnaire (Reporting by Svea Herbst-Bayliss and Matthew Goldstein; Editing by Claudia Parsons and Jim Impoco)