Sink or swim at SAC Capital
There's been a lot of talk about the "ruthless" culture of SAC Capital, so why would anyone want to work there?
Bloomberg weighs in, noting that "an internal recruiting team scours the investing landscape for promising portfolio managers Cohen might hire. The firm may track these people for years as their careers develop, awaiting the right moment to approach them. Those deemed talented enough are offered a tantalizing deal: Cohen will give you a couple hundred million dollars to manage independently, and you will sink or swim, based on your investing decisions."
The firm is able to charge a massive 50 percent performance fee, with 30 percent going to the manager and 20 percent going to Cohen.
"The catch is that Cohen, who simultaneously manages a separate multibillion dollar portfolio of his own, constantly mines his portfolio managers for their best ideas so he can trade on them himself, says the former employee. The arrangement provides Cohen with a built-in, highly motivated research staff that's aggressively searching for profitable ideas. And because Cohen is the only one who knows exactly what each portfolio manager is holding, he can pick and choose from the best opportunities across a broad array of options."
The other catch is that if you do not perform, you will be quickly terminated. That was the fate of Mathew Martoma, who was given a $9.3 million bonus in 2008 only to be terminated a year later for non-performance. Several of the former SAC Capital employees who were nabbed for insider trading were similarly let go after short stints. The pressure is enormous and you have to wonder if the incentives to cross the lines are too powerful.
- here's the article