Friday, February 26, 2010

Think You Want to be a Hedge Fund Manager?

Steven Cohen is one of the largest hedge fund managers in the world. SAC Capital is widely known in the industry not only for its terrific returns but also its rapid-fire trading style.

If memory serves, it used to be that SAC represented 2% of the total volume of shares traded on the New York Stock Exchange.

The financial rewards of working at a hedge fund can be, of course, unbelievable, but the pressure can also be enormous.

There was a recent article in Bloomberg on Cohen and his investing operation. I have included a link to the entire article below, but I thought I would show an excerpt from the piece about what its like working at SAC:

Cohen, who lives on a 14-acre (6-hectare) estate in Greenwich, Connecticut, which he bought for $14.8 million in 1998, allowed a reporter to visit his offices in Stamford. He declined to comment for this article.

Though Cohen attends more golf and other outings than he once did, most days the balding, blue-eyed, stocky investment manager does what he knows best: He trades. He has a perch in the middle of the Stamford floor, and his bets account for about 10 percent of profits -- down from more than 50 percent 10 years ago.

He doesn’t like noise, so the phones on the floor don’t ring; they light up. He prefers jeans and sweaters to suits and looks more like a tax accountant on casual Friday than a trading titan running a $12 billion hedge fund firm.

Picasso to Warhol

Near the trading floor hang pieces from Cohen’s extensive art collection, which includes works by Vincent Van Gogh, Pablo Picasso and Andy Warhol.

Cohen maintains the temperature on the trading floor at 69 degrees Fahrenheit (21 degrees Celsius) to make sure no one dozes. If a portfolio manager or analyst can’t answer a question about a stock, Cohen is likely to lash out. “Do you even know how to do this f---ing job?” is a standard barb, current and former employees say.

Portfolio managers make money, or they’re fired. They usually last about four years.