NEW YORK (Reuters) - As billionaire investor Steven A. Cohen deals with a spate of redemptions out of his own hedge fund, another firm in which his SAC Capital Advisors has money saw returns plummet in the first four months of the year.
Adams Hill Capital, run by former SAC equity portfolio manager Andrew Schwartz, was down 8.34 percent to the end of April, according to an investor note reviewed by Reuters.
In the same period, the S&P 500 stock index rose more than 12.7 percent and hedge funds on average gained about 4.6 percent, according to hedge fund tracking firm eVestment.
Adams Hill lost about 7.4 percent alone in April, when the stock market gained 1.9 percent. It could not be determined whether the hedge fund made up ground in May.
Adams Hill, along with another firm called Scopus Asset Management, is listed on regulatory filings as an adviser to an SAC Capital portfolio, meaning it manages a dedicated pool of money for Cohen’s hedge fund.
It is not uncommon for large hedge funds like SAC Capital to employ other advisers, also known as sub-advisers, to manage some of a firm’s money, especially if a manager is impressed with the outside firm’s track record.
Adams Hill and SAC did not immediately respond to a request for comment.
Adams Hill, which in total oversees roughly $425 million in assets according to the April investor note, manages more than $100 million of SAC’s money, according to a person familiar with Schwartz’s firm.
While it is never a good thing for a hedge fund to lose money, poor returns at Schwartz’s Westport, Connecticut-based fund come at a particularly bad time, since SAC is set to contract significantly over the next several months due to heavy redemptions by outside investors.
There has been much speculation on Wall Street about how Cohen and his 21-year-old firm will deal with requests by investors to redeem billions of dollars in the wake of an insider-trading probe that has intensified in recent months.
People familiar with the fund said outside investors asked to redeem up to $4 billion in the second quarter, on top of the $1.7 billion in first quarter redemption requests.
The withdrawals mean that SAC Capital, which will return the money by year’s end, will shrink in size by about 45 percent. That could impact Adams Hill if Cohen decides to pull back money from the fund as SAC’s capital base shrinks, said people in the hedge fund community.
Schwartz, who brought three SAC colleagues with him to his new fund, ran a large portfolio when he worked at SAC that focused on global resources equities.
Reporting By Katya Wachtel; Editing by Nick Zieminski