Key Takeaways
- • Gabe Plotkin's Melvin Capital delivered 32.1% returns after fees through September 2017, positioning the former SAC Capital portfolio manager among the year's top-performing hedge fund managers.
- • Plotkin is a notable alumnus of Steve Cohen's SAC Capital, the storied but scandal-plagued hedge fund that operated from 1992 until its transformation in 2014 following regulatory enforcement actions.
- • SAC Capital paid $1.8 billion in fines in 2013 after becoming the first major Wall Street institution in a generation to plead guilty to criminal insider trading charges, with an additional $1.2 billion penalty paid to resolve further criminal charges.
- • Steve Cohen transitioned SAC Capital into Point72 Asset Management as a family office in 2014 after returning the majority of outside investor capital, though Cohen and his partners retained substantial control of the remaining assets under management.
Summary
Gabe Plotkin, a former portfolio manager at Steve Cohen's SAC Capital, is delivering exceptional performance in 2017. Through September, Plotkin's hedge fund Melvin Capital has generated returns of 32.1% after fees, establishing him among the year's top performers and highlighting the continued strength of talent that emerged from SAC Capital's ranks.
Plotkin's success is noteworthy given the turbulent history of his former employer. SAC Capital, founded by Cohen in 1992, became one of Wall Street's most powerful trading operations, known for generating massive returns. However, the firm's reputation was severely damaged by a prolonged insider trading investigation that culminated in landmark regulatory settlements. In 2013, SAC Capital pleaded guilty to criminal insider trading charges and paid a record $1.8 billion in penalties—the first major Wall Street institution in a generation to face criminal conviction. The firm subsequently paid an additional $1.2 billion to resolve further criminal charges, and Cohen himself was barred from supervisory roles at hedge fund entities, though he was never personally charged.
Following these enforcement actions, Cohen restructured his operations. SAC Capital returned the vast majority of its outside investor capital and ceased operating as a separate entity in 2016. Cohen established Point72 Asset Management as a family office in 2014, which retained sufficient assets to maintain most of the firm's investment team. This transformation allowed Cohen to continue operating his core investment operation while operating under significantly different regulatory constraints.
Plotkin's 32.1% return through September 2017 demonstrates that despite the institutional challenges at SAC Capital, the trading talent and investment methodologies cultivated there continue to generate strong performance in the hands of seasoned practitioners, positioning Melvin Capital as one of the market's notable performers heading into the final quarter of 2017.
Plotkin's success is noteworthy given the turbulent history of his former employer. SAC Capital, founded by Cohen in 1992, became one of Wall Street's most powerful trading operations, known for generating massive returns. However, the firm's reputation was severely damaged by a prolonged insider trading investigation that culminated in landmark regulatory settlements. In 2013, SAC Capital pleaded guilty to criminal insider trading charges and paid a record $1.8 billion in penalties—the first major Wall Street institution in a generation to face criminal conviction. The firm subsequently paid an additional $1.2 billion to resolve further criminal charges, and Cohen himself was barred from supervisory roles at hedge fund entities, though he was never personally charged.
Following these enforcement actions, Cohen restructured his operations. SAC Capital returned the vast majority of its outside investor capital and ceased operating as a separate entity in 2016. Cohen established Point72 Asset Management as a family office in 2014, which retained sufficient assets to maintain most of the firm's investment team. This transformation allowed Cohen to continue operating his core investment operation while operating under significantly different regulatory constraints.
Plotkin's 32.1% return through September 2017 demonstrates that despite the institutional challenges at SAC Capital, the trading talent and investment methodologies cultivated there continue to generate strong performance in the hands of seasoned practitioners, positioning Melvin Capital as one of the market's notable performers heading into the final quarter of 2017.
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