SAC Capital’s Steve Cohen is at the SALT hedge fund conference in Las Vegas, but he’s sure to have plenty on his mind. First is his drop from 27 to 34 in II’s ranking of the top hedge fund managers by AUM. Second is what will happen when the Federal Reserve Chairman Ben Bernanke winds down his easing program in June. In a rare public speaking appearance at the SALT conference, the 54 year-old manager said he expects “a little pause” in the market before it resumes with a pretty good second half.
However, he said he is more worried about 2012 as some of the stimulus wear off. “But we’ll worry about it when we get there,” he told the audience.
Cohen, a self-styled stock picker, was up more than 2 percent in April and more than 7 ½ percent for the year, according to investors.
Cohen, who is reportedly negotiating an ownership stake in the New York Mets, stressed the government deficit is a major concern, calling it “the elephant in the room” that can’t be ignored. He said it will be solved in one of two ways. Either Democrats and Republicans will come up with a solution or the market will force a solution on them. “I prefer the former,” he told the audience.
The hedge fund manager is confident the problem is fixable. The billionaire insists Congress must address entitlement programs, which he thinks most people understand.
In general, Cohen thinks the market environment is good for hedge funds, stressing that most of them fare better during rising markets. He added that correlations between companies have dropped significantly, which is a good thing, since in this kind of environment he said you can create alpha and make money on both sides of the market.
Asked what sectors he likes most now, Cohen called energy “interesting,” adding, “I think the commodities sell-off provides a nice entry point. We’re also into the mobility theme. We’re going from 3G to 4G and there’s many ways to play that in the market.”
Cohen, who said SAC manages more than $12 billion and employs nearly 800 people, including 100 portfolio managers, insists he personally runs less than 10 percent of the firm’s capital. The stock trader stressed that SAC is a long-short equity firm and always will be. But it has branched out and now does some macro and has a sizable quant department.
He also conceded that he is learning how to trade other markets, stressing he is involved in macro and trading currencies and commodities. “The world has changed and it’s a macro world,” he said. “What happens in China affects what happens in the US. It’s a very diversified portfolio.”
