NEW YORK, Sept 18 (Reuters) - A former trader at billionaire Steven A. Cohen's former hedge fund SAC Capital Advisors LP wants to withdraw his 2013 insider trading guilty plea, saying he had forgotten about two instant messages that show he committed no crime.

Richard Lee said in Monday court filings that the messages uncovered in the last few months demonstrated how his purchase of 725,000 Yahoo Inc shares on July 10, 2009 was based on public information.

The plea was part of a cooperation agreement with prosecutors.

Lee "labored under a significant misapprehension of the facts of his own case" and now wants a dismissal or else a trial date, his lawyer Gregory Morvillo wrote. Prosecutors have not allowed the plea withdrawal, Monday's filings show.

A spokeswoman for Acting U.S. Attorney Joon Kim in Manhattan declined to comment.

If granted, Lee's request would remove another case from the win column of Preet Bharara, Kim's predecessor.

Bharara won more than 80 insider trading guilty pleas and convictions before U.S. President Donald Trump fired him in March. Several, including the conviction of former SAC portfolio manager Michael Steinberg, were overturned because of later court rulings.

Lee said that during plea talks, he recalled buying Yahoo shares after learning at about 11:30 a.m. on July 10, 2009, from Collins Stewart analyst Sandeep Aggarwal, that the company was planning a partnership with Microsoft Corp that could challenge Google's Internet search dominance.

But Lee said he now knows he did 97 percent of his buying earlier that morning, after learning that Collins Stewart had told clients about the planned partnership.

He said he had messaged Cohen about Collins Stewart's view at 9:13 a.m. and gotten a related message from an SAC trader at 9:38 a.m.

"Based on the information that I now understand, I do not believe I committed the offense of insider trading," Lee said. "I never would have pled guilty."

Lee's sentencing is scheduled for Oct. 26.

Aggarwal pleaded guilty in 2013 to insider trading charges. Prosecutors let him move to India to live with his family, pending a scheduled Oct. 17 sentencing.

Now called Point72 Asset Management LP, SAC pleaded guilty to fraud and paid $1.8 billion in U.S. criminal and civil settlements.

Cohen was not criminally charged. He agreed to stop managing money for outside investors until Jan. 1, 2018, to settle a related Securities and Exchange Commission civil probe.

Verizon Communications Inc now owns Yahoo's Internet business.

The case is U.S. v. Lee, U.S. District Court, Southern District of New York, No. 13-cr-00539. (Reporting by Jonathan Stempel in New York; Editing by Lisa Von Ahn and Cynthia Osterman)

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A Greenwich, Connecticut-based hedge fund that focuses on distressed credit and special situations is behind the purchase of a block of 46 taxi medallions that were snapped up in a foreclosure auction this week.

The medallions — the metal plates on yellow cab hoods allowing them to legally pick up street-hails — have plunged in value since the arrival of Uber and other ride-sharing services in the city.

They once fetched as much as $1 million but were sold for $186,000 each at the auction, an industry source told Business Insider. They once belonged to Evgeny "Gene" Freidman — a man known as the 'Taxi King'— who is now in legal and financial trouble as the value of his assets plunged.

The buyer, identified in bankruptcy court documents as MGPE Inc., was incorporated in 2010 by Mark Zoldan, who is chief financial officer of Marblegate Asset Management, legal filings show. We called Marblegate to ask about its strategy with the medallions and how MGPE fits in, but the firm declined to comment.

Hedge funds are closed to most public investors so they only have to disclose a very limited amount of information.

Marblegate manages about $627 million, which could include borrowed money, according to a regulatory filing. Marblegate describes its investment strategy as seeking "to purchase high yield and leveraged corporate credits and claims at a discount to intrinsic value and to realize the value of investments through a combination of restructuring, recovery and refinancing."

Andrew Milgram and Paul Arrouet are the firm's managing partners with Milgram serving as the chief investment officer — meaning they're the ones making investment strategy decisions. 

Of course, we can't say what MGPE's strategy with the medallions is  — but there are more ways than one to make a profit off this purchase. For one, because they were bought in a foreclosure auction and in a large block, the medallions probably went for below what they might fetch in the open market. Also, the medallion owners can generate income by leasing them out to taxi companies or individual drivers – who can't ply their trade without one. 

The $186,000 medallion price is not expected to become the new normal for future medallion auctions, according to Matthew Daus, who served as head of the Taxi & Limousine Commission for more than eight years.

"These medallions were foreclosed upon as a part of Freidman’s bankruptcy," said Daus, who currently works for the law firm Windels Marx. "These bulk bargain bids are not indicative of a medallion’s true market value."

He says hedge funds are a rare sight in the taxi industry.

Then, of course, there's the potential that this reflects a view that the hit that the taxi industry has taken from Uber is coming to an end, and the medallions will start to regain value.

SEE ALSO: A mysterious hedge fund just scooped up the foreclosed medallions from New York City's 'Taxi King'

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NEW YORK – Rubicon Fund Management, a large London hedge fund focused on trading around global economic events, has suffered a 33.2% loss in its flagship fund this year. 

The losses were disclosed in investor documents reviewed by Business Insider.

Ross Gillam, a spokesman for Rubicon at external PR firm Instinctif Partners, didn't respond to a request for comment.

In a July letter to investors reviewed by Business Insider, founder Paul Brewer attributed about half of the year's losses up until that point to wrong way bets on currencies. The fund had lost 27% after fees through mid-July, and has only added to losses since.

In a letter to clients this week, Rubicon did not explain what had caused the more recent losses.

The fund did say that it believed prices for dollars would increase in coming months, however.

The performance marks a sharp turnaround from last year, when the fund gained 7.3%, according to the investor document. It also stands in sharp contrast to other so-called macro hedge funds, which are breakeven for the year through August, according to data from HFR.

A newer fund that the firm runs, meanwhile, the Rubicon Dynamic fund, is up 13.14% this year through end of August, according to investor documents.  Those gains were mostly on bets from emerging markets. The fund launched in February 2016. 

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Artificial intelligence has been around since the 1950s but is exploding in popularity recently, especially in the world of finance.

The idea that an investor can do a bit of programming, and then sit back to watch the profits roll in is an exciting idea, especially when it works. But according to a story by Adam Satariano and Nishant Kumar from Bloomberg, one hedge fund manager was initially scared by how well his AI trading machine worked.

"Were we scared by it? Yes. You wanted to wash your hands every time you looked at it," Luke Ellis, CEO of $96 billion hedge fund Man Group, told Bloomberg.

Ellis told Bloomberg that his firm developed a system that worked well and generated profits, but the firm couldn't really explain why it worked or made the trades it did, which is why they held off from rolling it out broadly. But, after several years a Ph.D. level mathematician at the firm decided to dust it off and give it a small portfolio to play with. Since then, the firm has been made the AI model a regular part of the family at Man Group.

It's worth reading the story behind the firm's trading algorithm from Bloomberg, as it tells the tale of an especially successful implementation of one of the hottest areas of tech right now. 

Artificial intelligence is an umbrella term for a computer program that can teach itself. Its power comes from its ability to "learn" the rules of the whatever it's tasked with without them being provided ahead of time. The best AI systems find rules and patterns that humans would miss by crunching huge amounts of data that would prove unwieldy for humans.

To understand this concept a bit better, think of a computer playing a game of chess. Chess is a finite world with a defined set of rules that a human can list for a computer ahead of time. There are a huge number of possible scenarios in a game of chess, but the number is finite and computer-crunchable.

Artificial intelligence systems are not given the rules ahead of time. Instead of listing the rules of chess, a computer using AI would simply be told to watch a huge number of chess games being played and figure it out. After enough matches, the computer would learn the rules of the game and be able to go head to head with a human player. That's exactly how Elon Musk's AI company beat a human in the incredibly complex game of Dota 2 recently.

In the world of finance, data points like shipping routes, weather and investor sentiment can all affect the markets. A human could never program all the rules that affect the markets because those rules are hard to define and almost infinitely numerous. But, they could feed a computer a huge number of data points and tell the computer to figure it out, which is largely what Ellis and his firm did to program their AI machine. He told Bloomberg that he gets pitched new data sets all the time because of this.

AI systems are coming into vogue now because the technology used to crunch these huge data sets has finally caught up with traders' ambitions. Companies like Nvidia and AMD are developing new computer chips that are fine-tuned to run AI systems, and Nvidia's CUDA software platform is helping researchers run their programs even faster.

AI doesn't mean the end of human traders though. Some over-exuberant trading programs are suspected to have caused a stock market flash crash in 2010, according to the Bloomberg story. Ellis and his team have successfully used artificial intelligence to improve returns in their firm, but it's not run entirely by the robots yet. 

Regardless, AI is taking over the world of finance. There will be winners and losers, but it's probably here to stay.

Click here to read the full Bloomberg story

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Whitney Tilson is closing his hedge fund.

In an excerpt of a letter sent to clients, Tilson said that underperformance had been a reason to close his firm Kase Capital. 

"If I were managing only my own money, the fund’s recent results wouldn’t bother me quite so much," Tilson wrote. "But investing and running a money management business are two very different things, and reporting sustained underperformance to you was making me miserable."

Kase, which managed about $50 million, had lost about 8% this year, according to Dow Jones, which earlier reported the news.

In an emailed newsletter, Tilson said that he wasn't yet sure what he would do next, but that he expected to continue in the investment field. Among options he floated:  

1. "Unearthing a few great investment opportunities each year, in which I can invest personally as well as share with a few others;
2. Serving on corporate boards;
3. Doing consulting in areas in which I have expertise such as capital allocation, strategy, and activist investing; and
4. Teaching and mentoring young value investors via writings, videos and seminars."

Here are excerpts from the letter Tilson sent to investors:

Dear Partner, 

I wanted to follow up on the conversations I’ve had with each of you recently regarding my decision to close the fund and return your capital. 

Most importantly, I’d like to reiterate my tremendous gratitude for your patience and confidence in me over the years. You gave me the time to try to improve the fund’s performance, and I deeply regret that I was unable to do so.

If I were managing only my own money, the fund’s recent results wouldn’t bother me quite so much. But investing and running a money management business are two very different things, and reporting sustained underperformance to you was making me miserable.

I would have liked nothing better than to have rewarded you for standing by me during these difficult times by ending on a high note, but I ultimately concluded that I couldn’t in good conscience continue to manage your money unless I had a high degree of confidence that I could turn things around within a reasonable time frame.

Over the nearly two decades that I have managed money professionally, I have endured other periods of underperformance. During those times, however, I was certain that the losses were temporary because our portfolio was filled with cheap stocks that would quickly rebound.

Alas, I don’t have that feeling today. Historically, I have invested in high-quality, safe stocks at good prices as well as lower-quality ones at distressed prices. Given the high prices and complacency that currently prevail in the market, however, my favorite safe stocks (like Berkshire Hathaway and Mondelez) don’t feel cheap, and my favorite cheap stocks (like Hertz and Spirit Airlines) don’t feel safe. Hence, my decision to shut down.

It has been a tremendous privilege to manage your capital, and I want to express my deepest gratitude for your support and friendship over the years. It means the world to me. 

Sincerely yours, 

Whitney

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• Bridgewater, the world's largest hedge fund firm, says the Fed and other central banks are going to cause problems by raising interest rates from historic lows.
• Bridgewater says the Fed has miscalculated the risks, such as economic sensitivity to interest rate changes.

The world's largest hedge fund told clients that the Federal Reserve is making a mistake by raising interest rates.

"The Fed is basing its moves on classic cyclical indicators and the desire to ‘normalize’ the balance sheet," Bridgewater Associates told clients in a private note, which was seen by Business Insider. "Based on the calculations that we do, we doubt that the Fed will be able to execute its plan without causing problems."

Bridgewater founder Ray Dalio, co-CIO Bob Prince and Melissa Saphier authored the note, dated September 21. The Westport, Conn.-based firm manages about $160 billion.

The Fed has raised rates twice this year, and investors expect them to raise them for a third time at their year-end meeting in December. The central bank kept rates at historic lows following the 2008 financial crisis in order to boost the economy, a move originally welcomed by a Wall Street on the brink, but since challenged by banks yearning for higher returns. In an announcement last week, the Fed also said that it would begin shrinking its $4.5 trillion balance sheet next month, the agency's biggest post-recession policy shift since it started raising rates in 2015.

In the client note, Bridgewater laid out five reasons it thinks raising rates is problematic, under a header titled "Why we think going down this path is a mistake":

1. "There is not nearly enough inflation and overheating risk to make concerns about inflation and overheating of paramount importance.
2. Risks are asymmetric on the downside (i.e., it's tougher to reverse an economic and market decline with an easing than it is to reverse an economic or market acceleration with a tightening because of the proximity of interest rates to 0% and because easing with QE is now less effective.)
3. Tightening at rates that are faster than are built into the yield curve is likely to trigger negative wealth effects because the effective durations of assets are now very long.
4. Economic sensitivities to interest rate changes are greater than normal because the level of global indebtedness and non-debt obligations (especially pensions and healthcare) in dollars and other currencies is high...
5.  A downturn in the economy would be intolerable to those with lower incomes and wealth, and would make social and political tensions dangerous.”

Dalio has discussed this topic previously, most recently during a book tour in which he has made the rounds at media outlets.

In an interview with Business Insider's Henry Blodget, he said: "The risks are asymmetric on the downside ... If you tighten monetary policy, certainly by more than is discounted in the market — and what's discounted in the market is very minor rising market — that will reverberate through asset class prices."

With assistance from Pedro da Costa

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The market is calm. Perhaps too calm.

The lack of price swings has investors mired in a sea of complacency, which has them ignoring potential risks, says Societe Generale.

The firm specifically cites the CBOE Volatility Index— or VIX — which is used to track nervousness in the US stock market.

Not only is the so-called fear gauge locked near the lowest levels on record, but hedge funds are betting it'll decline even further. Their VIX positioning is the most bearish on record, according to data compiled by the US Commodity Futures Trading Commission.

"Compare that with dancing on the rim of a volcano," a group of SocGen strategists led by Alain Bokobza, the firm's head of global asset allocation, wrote in a client note. "If there is a sudden eruption (of volatility) you get badly burned."

This isn't the first time SocGen has issued a warning about low volatility. Two weeks ago, the firm drew parallels to conditions leading up to the 2007 financial crisis.

Describing the current situation as a "dangerous volatility regime," the firm cited the strong mean-reverting tendency of price swings as a big reason why investors should be bracing themselves.

Other heavyweights in the investment field have also spoken out about the low-price-swing situation that they see as untenable. In late July, JPMorgan global head of quantitative and derivatives strategy Marko Kolanovic compared rock-bottom volatility to the conditions leading up to the 1987 stock market crash.

In a recent interview with Business Insider, Laszlo Birinyi, the investment guru who predicted the bull market and has been repeatedly correct over its 8 1/2-year run, said that betting on the VIX is a "quick way to lose money."

But it appears traders have yet to listen. In recent months, they've continued to pile into bets that markets will continue to sit still, while viral tales of huge profits made shorting volatility have likely inspired copycats anxious to make a quick buck.

And while many experts are quick to warn against low volatility, there's no broad consensus around what will shake the market out of its slumber. Complacency indeed.

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A Steve Cohen alum is having a monster year.

Gabe Plotkin's Melvin Capital is up 32.1% after fees this year through September, despite posting almost no gains last month, according to a person familiar with the matter.

Plotkin is known to have been one of the star money makers at Steve Cohen's SAC Capital, which has since become Point72 Asset Management after SAC shut down after pleading guilty to insider trading. Plotkin and his team at SAC previously managed a book of mostly consumer product stocks worth about $1.3 billion, The New York Times reported in 2014.

New York-based Melvin Capital, which is a long-short equity fund, now manages about $3.5 billion, according to the person familiar with the situation. The firm has been steadily growing in assets, managing $1.9 billion at the start of the year, according to the HFI Billion Dollar Club ranking. 

Representatives for Plotkin declined to comment.

Melvin's strong performance comes at a time when many funds are struggling to post the double-digit gains the industry was once known for. Through July this year, the industry gained 4.8%, according to data provider HFR.

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My how the tide has turned for tech stocks.

Until recently, the industry was viewed as the indispensable driver of the equity market. Companies like the so-called FANG group — which includes Facebook, Amazon, Netflix and Google — received loads of credit for pushing stock indexes to new records.

Now the shoe is on the other foot, with hedge funds and other large speculators the most bearish in 16 months on the tech sector, Commodity Futures Trading Commission data show.

What's more, investors have pulled roughly $900 million from exchange-traded funds tracking tech stocks in the past week alone, the biggest outflow for any industry, according to data compiled by Bloomberg.

And in a shocking twist for the Wall Street doomsayers who warned of a painful reckoning in the event of tech weakness, US indexes have continued to hit new all-time highs, even amid the shift in sentiment.

This surprising development is best explained by the ongoing rotation occurring in the stock market. As tech has faltered, energy and financial stocks have stepped up to fill the void. They've been boosted by a surged in crude oil prices and the prospect of higher interest rates, respectively, and it's proven to keep the 8 1/2-year bull market chugging along.

The truth is in the returns. Tech was up more than 25% in the first eight months of of the year, then fell in September. Meanwhile, the energy sector surged 9.8% in September after a 17% year-to-date decline through August.

With the benefit of hindsight, it's clear that this rotation has played out multiple times this year, with money pulled from tech simply being reallocated elsewhere in the stock market.

And now that the dynamic is attracting a little more attention, equity enthusiasts have yet another bullish argument to add to their tool belt.

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• Steve Cohen, the hedge fund billionaire banned from managing outsiders' money, has been prepping a fund via an external firm.
• A big question is how much Cohen's new fund will raise.
• Reports about how much fresh money the new fund will target have varied – up to $10 billion on the high end.
• That has frustrated Cohen and the people who work for him.
• The target is closer to $2 billion.

Unless your name is Steve Cohen, the only thing you can say for sure about the billionaire investor's return to the hedge fund world is that it's going to be highly watched. 

Cohen, via an external marketing firm, has been laying plans to manage other people's money for the first time since shutting three years ago, and right now people have more questions than answers about what it'll look like. 

Reports of the fundraising target have varied wildly. The Wall Street Journal reported in May that Cohen was seeking to raise about $9 billion, which, combined with his roughly $11 billion family office would lead to a $20 billion fund. Bloomberg News reported last month that investors have been told the fundraising target is between $2 billion to $10 billion.

A person with direct knowledge of the plans tells Business Insider that Cohen's Stamford Harbor fund is likely to aim closer to $2 billion in fresh funds.

Several people familiar with the matter say that the fund was never expected to be as large as $10 billion. Cohen and the people working for him have been frustrated about the large numbers floating around. They create expectations that he may not be able to meet — making it seem like he missed his own goal, some of the people say. At $10 billion, the launch would be the largest ever for a new fund. 

A spokesperson for Cohen and Stamford Harbor declined to comment.

To be sure, even $2 billion is large by the standards of new hedge funds and it's not uncommon for hedge-fund managers to keep things vague so they don't wind up having to defend a smaller-than-expected capital raise. 

Of course, Cohen isn't quite in line with other new fund managers — he comes with both a record for astonishing returns and the legacy of an ugly insider trading investigation that got his fund, SAC Capital, shut down. 

It's clear that there's been some movement toward the fund launch. Some potential investors have received documents outlining the potential fund, but non-disclosure agreements are keeping them from revealing much of the detail, people close to the situation said. Everyone who spoke with Business Insider asked not to be named discussing private matters.  

The documents indicate investors will need to put in $100 million to gain access to the new fund and pay more than 2.5% in management fees, Business Insider earlier reported. Those terms are steep by hedge fund standards, but not entirely unexpected for a manager with Cohen's reputation.

Doug Blagdon, who previously headed marketing at SAC Capital Advisors, is leading the marketing effort at an external firm, ShoreBridge Partners. The effort has been relatively small scale and led separately from Cohen. 

Cohen is mostly known for long-short equity investing. He has been running a family office called Point72 Asset Management, with some $11 billion of his personal fortune and that of some staffers, since 2014 after he agreed not to manage other people's money and return outside investors' capital. The agreement came after a years-long insider trading investigation at SAC that ended with a conviction for one of Cohen's subordinates but not him. His failure, according to the SEC, was to supervise those traders as head of SAC Capital. SAC also pleaded guilty and paid a record fine, $1.2 billion, to settle insider-trading claims.

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Carlson Capital's Black Diamond Thematic fund has added to its losses this year, and is down 19% after fees this year through September 30, according to a client update seen by Business Insider.

The long-short equity fund had previously lost 14.2% net this year through July 31, according to a client update previously reported by Business Insider. The fund managed $1.1 billion at the end of August, according to an investor. A spokesman for Carlson declined to comment.

It's unclear what caused the further decline. However, in a June letter, the fund partially blamed bitcoin mania for the drop in performance. The portfolio managers, Richard Maraviglia and Matthew Barkoff, said their fund remained short the stock market, notably in the semiconductor space.

But the surge in interest in bitcoin and ethereum has pushed shares of semiconductor makers higher. Their chips are used in the computers that solve complex equations to mine for cryptocurrencies.

The firm has seven funds in total. Here's Carlson's scorecard for the firm's five other funds, this year through September 30:

• Double Black Diamond, LP: +2.9%
• Black Diamond Partners, LP: -4.6%
• Black Diamond Relative Value Partners, LP:  -1.76%
• Black Diamond Arbitrage Partners, LP:  +6.95%
• Black Diamond Mortgage Opportunity, II:  +6.97%
• Black Diamond Energy, LP: -8.54%

Carlson managed $9.9 billion at the start of the year, according to the HFI Billion Dollar Club ranking.

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NEW YORK – Brevan Howard's flagship fund, run by billionaire Alan Howard, is down for the year as the firm continues to lose money.

The Brevan Howard master fund fell 4.61% this year through September, according to a client update seen by Business Insider.

The fund managed $6.8 billion at the end of August, according to a person familiar with the situation – a far drop from years earlier.

Once a titan in the industry, Brevan Howard managed about $40 billion firmwide in 2013. As of August, it managed about $11.1 billion firmwide, almost a quarter of previous assets.

The Europe-based firm invests on macroeconomic themes, and has struggled for several years, losing assets amid underperformance. 

The flagship fund gained 3% last year, but lost about 2% in 2015 and 0.8% in 2014, according to data from HSBC.

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A hedge fund run by the scion of New York real estate dynasty is returning money to outside investors amid poor performance, according to documents seen by Business Insider.

The fund is O-Cap Management, a small New York-based hedge fund managed by Michael Olshan.

Olshan is the son of Morton Olshan, the chairman and founder of commercial real estate giant Olshan Properties, and is a former managing director at hedge fund Jana Partners.

Launched during the Great Recession, O-Cap's primary fund lost 17.7% after fees from September 2009 through the end of June this year. The S&P 500 was up 161% over the same period.  

O-Cap lost 4.3% in the second quarter this year and was down 8.03% year-to-date in 2017.

Michael Olshan did not respond to calls and emails, and the fund's chief financial officer, Lloyd Jagai, hung up on a Business Insider reporter when reached by phone.

In a September letter to clients, O-Cap blamed its losses on poor market conditions, pointing to the rise of passive investment vehicles like ETFs, the disproportionate share of FAANG tech stocks in the S&P 500's gains, and an overall lack of public sector opportunities. The company was heavily exposed to energy, a bet that took a hit amid oil and gas industry turmoil, losing 8.45% in the first half of this year. 

"We do not feel today’s market is rife with attractive buying opportunities in the core sectors in which we focus," Michael Olshan wrote in the client letter. "In our opinion, market participants are taking on an increasing amount of risk for lower return expectations, and are doing so late in a cycle that has been characterized by strong reflation in asset prices and public equities."

"Today’s public equity markets can be defined by too much capital chasing a meager set of bargains," Olshan added. "The result is increased risk taking for lower and lower return expectations." 

The fund continues to manage money for Olshan and his family, and said it sees more opportunities in private company investments.

O-Cap Management is a small fund. Documents filed with the Securities and Exchange Commission say the firm held $14.1 million in gross assets in its primary fund at the end of March, 56% of which belonged to management. Management owned 5% of the smaller fund, which had $5.8 million in assets. 

Olshan comes from a prestigious and successful New York business family, and O-Cap at one point had its sights set on raising as much as $1 billion, according to trade publication HFMWeek.

Morton Olshan began buying real estate properties in the 1950s and amassed an enormous portfolio of properties in Manhattan and beyond. Today, Olshan Properties owns and manages "14,000 units of multifamily, 10 million square feet of retail, 3 million square feet of office and 1,447 hotel rooms located across 11 states," according to the company's website.

Morton Olshan became a minority owner of the New York Yankees in 2000 and remains a member of the club's board of directors. He also serves as a member of The President’s Council of the New York Public Library.

Andrea Olshan, Morton's daughter and Michael's older sister, runs the family real estate business today.  

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Billionaire Steve Cohen's longtime top trader is leaving ahead of the hedge fund manager's expected supersize return to managing outside money.

Phil Villhauer is leaving Cohen's family office, Point72, after working for Cohen since 2002, the New York Times reported earlier Tuesday, citing an internal memo.

Villhauer got his start at Cohen's SAC Capital, which was shut down for insider trading. Cohen turned SAC into an $11 billion family office following a settlement with the government. Cohen is widely expected to accept outside money again starting next year, when a ban on him managing outside money ends.

A spokesman for Point72 confirmed that Villhauer is leaving and declined to comment further.

Cohen's relaunch is highly anticipated on Wall Street. Business Insider previously reported that investors are expected to pony up a minimum of $100 million for the chance to invest.

A person with direct knowledge of the launch earlier told Business Insider that the new fund is targeting close to $2 billion in outsiders' money – a steep drop from previously cited figures nearing $10 billion.

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Parag Shah, a longtime executive at world's largest hedge fund Bridgewater Associates, who often served as the firm's spokesman, has stepped down, The Wall Street Journal reported.

From the Journal:

"He was part of the management team that interacted with some of the hedge fund’s most important clients, which include public pension funds and other deep pools of money."

Shah didn't immediately respond to an email seeking comment.

Shah is the latest high-level employee set to leave. Earlier this year, Bridgewater announced a shakeup on the executive team which included promoting David McCormick to co-CEO, the fifth such CEO since the beginning of last year, per WSJ.

Earlier this year, head of trading Jose Marques was scheduled to step down, Business Insider reported. Jeff Wecker, a former senior manager, also recently left and moved to Goldman Sachs.

Bridgewater manages about $160 billion in assets, and was founded by billionaire Ray Dalio.

Read the full report over at The Journal >>

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• Balyasny, a $12 billion hedge fund, has been ramping up for the earnings season, when companies report their quarterly results.
• The firm has struggled of late to put up strong numbers, and it previously told clients that earnings were the big catalysts it would need to get right "because that is when dispersion is most likely to occur."
• The firm's funds gained 2.7% and 3.8% this year, lagging hedge fund peers.

Balyasny, a $12 billion hedge fund, is ramping up for earnings season — and has a lot on the line.

The Chicago-based firm has posted slight gains this year but is still losing to competitors, according to a September client letter seen by Business Insider.

The Chicago-based firm's Atlas Global fund gained 0.24% in September, bringing its year-to-date performance to 2.16%. The Atlas Enhanced fund gained 0.41% in September, bringing its year-to-date performance to 3.78%.

Those are slight improvements for Balyasny; at midyear, the firm's Atlas Global was close to flat while the Atlas Enhanced fund was up 0.78%, Business Insider previously reported. Still, Balyasny is lagging competitors. The HFRI Fund Weighted Composite Index gained 5.7% this year through September.

Over the summer, the firm’s founder Dmitry Balyasny told clients that the stock market was challenging traditional stock pickers. In the letter, which was reported by Business Insider, he said the rise of passive investing and quant funds and a surge in hedge-fund assets had made the stock market more efficient, leaving fewer easy money-making opportunities.

"We think the challenges, consolidation, and changes in the industry are due to one main factor: There isn't enough alpha to make everyone happy," Balyasny said in the earlier letter.

A spokesman for Balyasny didn't respond to a request for comment.

Earnings catalysts

In the summer letter, Balyasny also said the rise of passive investing had given increased importance to certain catalysts, such as earnings releases. Earnings are "extremely important to play — and play correctly — because that is when dispersion is most likely to occur," Balyasny wrote at the time.

Balyasny added: "We believe that as we continue to scale up deployment and enter summer earnings season, returns should improve back to our target range," Balyasny said.

In a September letter to clients reviewed by Business Insider, Balyasny said the firm was ramping up for earnings season. "We are identifying fresh, variant ideas on both the long and short side," Balyasny wrote, adding:

"We are keeping an eye on the upcoming elections in Japan, the stand-off with North Korea, the possible selection of a new Fed chairman, and U.S. tax reform legislation as potential catalysts for shaking up the low volatility environment. "

Earnings season is just kicking off, with more than 200 companies set to report earnings on Thursday and Friday.

Quick gains

The September letter indicated that Balyasny's investment picks typically delivered a big chunk of their returns within a month of a position being initiated but that the firm was also posting gains on positions it had held for a month or longer.

"Year-to-date, 48.4% of our alpha has been made within one month of initiating a position," Balyasny wrote in the September letter. "While most of the alpha has been generated in first month, the 1-3 month bucket has improved considerably as the stock picking environment continues to normalize this year."

Performance in the Atlas Enhanced fund was driven by bets in the tech and consumer spaces, he added.

Balyasny managed $12.6 billion as of the start of the year, according to the HFI Billion Dollar Club ranking.

SEE ALSO: Billionaire Steve Cohen has lost his top trader ahead of his supersize hedge fund launch

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• Jamie Zimmerman is one of the few, and first, female investors to run a hedge fund. She started Litespeed Partners in 2000.
• The fund has had a tough run of late, and now manages less than half of what it did two years ago.
• Hedge funds running similar investment strategies have also struggled. Some have shut.

NEW YORK – A hedge fund started by a pioneering female investor has posted slight gains this year after suffering a steep drop in assets.

Jamie Zimmerman's Litespeed Partners now manages about $725 million, less than half of what the fund managed in October 2015 when it had around $1.9 billion, according to a person familiar with the figures who requested anonymity because the information is private. The fund managed about $3.24 billion at the start of 2015, according to a Reuters report from the time.

Litespeed, which makes bets on distressed companies and company events such as mergers and acquisitions, is not alone. Last year, investors pulled $38 billion from event-driven funds – those that bet on company activity – and investors have yet to re-up, according to data from Hedge Fund Research.

Bigger hedge funds have also recently shut, notably Perry Capital and Eton Park, as have smaller peers, such as Chesapeake Partners.

Litespeed's performance has been in line with competitors this year, meanwhile. The fund gained about 5.9% after fees through September this year, according to the person familiar. So-called event-driven funds also gained 5.9% over the same period, per data tracker HFR.

Litespeed gained +1.9% last year, and dropped -11.5% in 2015 and -5.31% in 2014, according to people familiar with the numbers. That's compared to event-driven peers, which posted +10.5% last year, -3.5% in 2015 and +1.08% in 2014, per HFR.

Zimmerman, who opened Litespeed in 2000 with $4 million, is one of the few women to run a hedge fund business. Meanwhile, across the industry, only 3% of senior investment roles were held by women in 2012, according to trade publication CIO.

Zimmerman graduated from Amherst College in 1981 and went on to earn a law degree from the University of Michigan. She started her career as an attorney focusing on bankruptcy, where she learned to analyze to dissect the US bankruptcy code and creditors before switching into finance, according to a 2005 profile in the Wall Street Journal.

She told the paper that her gender had not hampered her career.

"It's irrelevant," she said at the time. "It just wasn't a factor in anything I did in my life."

By and large, few women hedge fund managers exist. Reasons include a lack of recruitment efforts from disproportionately male execs to broken pipelines and networking opportunities.

SEE ALSO: Balyasny, a $12 billion hedge fund that's trailing its peers, is ramping up for a critical few weeks

MUST READ: Why men dominate the hedge fund industry

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Maverick Capital is starting two quant funds, according to documents seen by Business Insider.

The Maverick Fundamental Quant Funds will accept money starting January 1, 2018 and will close once assets reach $1 billion in each, the documents show. The funds will prioritize existing Maverick investors.

Traditional stock pickers have been venturing into quant strategies over the past few years. And quant strategies have been hoovering up assets.

"Data science and quantitative analysis continue to hold the attention of the fundamental managers," Carlos Meija, managing partner at recruiting firm Options Group, said in a recent report. "On the one hand, they are eager to explore the ways in which big data can fuel idea generation and position management; and on the other hand, they are worried about how to compete with quantitative/systematic investors and HFT firms. As a result, equity hedge funds are hiring data strategists, scientists and engineers."

Dallas-based Maverick's flagship fund, meanwhile, had made no money as of mid-year, Business Insider earlier reported.

The firm, which as of mid-year managed about $10.5 billion, primarily blamed its short book.

Maverick was founded by Lee Ainslie, a protégé of famed stock picker Julian Robertson.

SEE ALSO: A hedge fund started by a pioneering female investor has lost more than half its assets in two years

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A tech focused stock team from Steve Cohen's investment firm is readying for launch.

KCL Capital, founded by Chris LaSusa and Kevin Cottrell, plans to open November 1 with 11 people on staff, people familiar with the situation said.

The New York-based firm's name is a combination of the founders' initials, the people said. The firm, which has been making the rounds at hedge fund investor events, is expected to raise hundreds of millions of dollars over the coming months, though an exact target is unclear.

The people asked to go unnamed because the information is private.

KCL plans to invest in global tech, media and telecommunications stocks, which the founders specialized in at Point72 Asset Management, Steve Cohen's family office. LaSusa worked at Cohen's firm for 14 years, and Cottrell worked there for 12, according to one of the people close to the situation.

That included the duration of the transition from hedge fund SAC Capital, which was forced to shut to outside money for insider trading.

LaSusa, who is acting as the portfolio manager of KCL, and Cottrell, who is director of research, have brought on several staffers who previously worked at Point72. They include:

• Braxton McKenzie, data scientist
• Shayne Dolden, analyst 
• Craig Cerone, analyst
• Thomas Li, analyst

Other hires include chief operating officer Jon Schlafman, previously managing director at Alcentra, and chief financial officer Charlie Murphy, who was previously the CFO at Jamie Zimmerman's LiteSpeed Partners. The firm has also hired a junior analyst who is starting Monday and a trading operations clerk.

Cottrell and LaSusa didn't respond to a request for comment.

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Brevan Howard, the London-based hedge fund run by billionaire Alan Howard, is launching a new fund to bet on an increase in volatility in the US Treasury market. 

The fund, called the Brevan Howard CMS Curve Cap Master Fund, will be led by senior trader Rishi Shah, who has been with the firm since 2010 in Geneva and New York, according to documents seen by Business Insider.

The new fund will use what are called constant maturity swap curve caps to bet on both a steepening of the US yield curve and an increase in curve volatility.

In simple terms, the yield curve shows the difference between yields on short term government debt and long term government debt. The smaller the difference, the flatter the curve. 

Interest rate policy and government bond buying have combined to both flatten the curve and reduce volatility.

Brevan Howard is betting that's going to reverse as central banks start to shrink their balance sheets and uncertainty over the leadership of the Fed circulates. 

Some of the details of the fund launch were previously reported by Bloomberg. 

The US government bond market makes up around 30% of the fixed-income market, according to the Securities Industry and Financial Markets Association and American Bankers Association. In a letter to the Securities and Exchange Commission last year, they said the Treasury market is "the most important global benchmark for pricing and hedging spread asset classes and is a key transmission mechanism for US monetary policy."

As of August, Brevan Howard managed about $11.1 billion firmwide, Business Insider previously reported. That's down from about $40 billion in 2013.

The firm has in recent months been launching new strategies, including one managed by founder Alan Howard. The flagship fund fell 4.61% this year through September, Business Insider reported.

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