The Morning Brief: Pressure Mounts on SAC; Maverick, Kingdon Notch Gains

Federal officialsappear to be circlingSAC Capital’s Steve Cohen. According to a new report, the Securities and Exchange Commission and the Federal Bureau of Investigation are looking into earlier trades made by the hedge fund firm in the shares of biotech company InterMune in 2010 and weight loss company Weight Watchers International in 2011.

Size continues to matter to hedge fund investors. HFR points out that $13 billion of new money invested in hedge funds in the third quarter went to firms with more than $5 billion in assets. Altogether through the first three quarters of the year, $43 billion of the $31 billion inflows went to those large firms. In other words, the smaller firms had net outflows. HFR also noted that in the third quarter alone, equity hedge and event-driven strategies experienced net redemptions of $5.2 and $1.3 billion, respectively. Funds of funds suffered $4.4 billion in net outflows, the sixth straight quarter that more money left these funds than was invested in them.

The Baupost Group, headed by Seth Klarman, reported that it owns 10.73 percent of NovaCopper Inc., a base metals exploration company operating in the Ambler mining district in Alaska. The share purchase was structured as a passive investment.

More hedge funds posted gains for the year through November. Lee Ainslie’s Maverick Capital and Mark Kingdon’s M. Kingdon Offshore both racked up losses in the mid-teens last year, but Ainslie has done a much better job of erasing the deficit this year. Maverick was up 18.65 percent through the end of November after losing 14.85 percent last year. However, Kingdon is up just 9.78 percent through November after being down about 18 percent in 2011.Ricky Sandler’s Eminence fund was up another 1.60 percent in November, boosting his full year gains to 22.73 percent.