By Nicholas Varchaver
October 23, 2016

Good morning.

Sometimes, you just need a little home-cooking. Having (I hope) established some bona fides in the past few weeks by emphasizing the work of other publications, I want to start this week’s edition by calling your attention to two excellent Fortune features before spotlighting some other superb work.

1. The Return of Steve Cohen

Jen Wieczner’s profile of Steve Cohen (“Inside Billionaire Steve Cohen’s Comeback”), the hedge fund trader who is famous or infamous, depending on your point of view, is a must read. Cohen made his bones at a fund he named after his initials, SAC. He was a notoriously demanding and successful trader and boss—so successful that customers were willing to pay 3% fees and give up 50% of the investment gain for the privilege of letting him invest their money. As Wieczner’s article points out, Cohen was dogged for years by suspicions—were they mere jealousy or a reasonable reading of the evidence?—that his stellar returns were, let’s say, assisted by information not available to the average investor. Cohen always denied wrongdoing, but his firm ultimately pleaded guilty to criminal insider-trading charges in 2013 and agreed to close down. Cohen himself, a bogeyman for a succession of ambitious prosecutors, never faced criminal claims. The article describes a very favorable civil settlement with the Securities & Exchange Commission. It barred Cohen from managing investors’ money (but let him keep overseeing it for himself, his family, and his employees) only till 2018, when he can resume. Cohen is cagey as to whether he will actually do that, but it’s hard to imagine he’ll be able to stop himself. This is a man who brings five computer screens with him to trade when he goes on vacation, and even when he’s on a yacht in a different time zone, buries himself below decks during the stock market’s trading hours.

I was particularly struck by one moment in the story, and let me note here that Wieczner interviewed Cohen while he was flanked by two public relations operatives and his general counsel. Interviewees, as is their right, often try to control a conversation, and outnumbering the questioner four to one is a power move, the interview equivalent of a boss situating his desk and chair on a raised platform so that every visitor feels small by comparison. Cohen and his team were clearly trying to convey the impression that he is relaxed, at peace with himself, and has left his legal problems in the distant past. (You should check out the story just to see the photos of Cohen kicking back at his Connecticut mansion.) Despite all that, revealing moments can occur. For my money, that moment comes in Cohen’s quote below that he’s “not trying to prove anything.” Sometimes, through the alchemy of rhetoric and context, a comment ends up conveying the exact opposite of the actual words:

“Graze the memory of 2013, though, and Cohen’s merry expression morphs to stone. It’s a period he doesn’t like to talk about, a year that in recollection remains dark, painful, and full of shame, one that his friends and associates think he would do better to forget. To truly redeem himself, he’ll have to demonstrate unwavering adherence to the law—and show that he can still post industry-topping returns while under that microscope. That’s the only way people will believe that he earned his billions honestly and trust him with their money again. ‘I think he wants to correct the record,’ says a former portfolio manager at SAC. While many of his associates believe that theory, Cohen rejects it. ‘I’m not trying to prove anything, okay?’ he says, his face grave as a cement slab. ‘I just don’t want to ever go through, nor do I want my employees to go through, what we went through a few years ago.’”


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