Sunday, February 05, 2006

Maybe Google Was a Sell

On any given day, hedge fund manager Steve Cohen, of SAC Capital, will walk into work and make between 2 and 5 million dollars.

The next day, he'll come into work and do it all over again.

Make no doubt about it -- today's hedge fund managers are making CEOs and atheletes look like vagabonds.

Cohen himself is a marvel -- According to statements, the $6B fund he manages spits out annual returns in excess of 40%.

How does he do it, you ask?

Well, probably by getting in and out of high octane stocks before the rest of Wall Street drops them like a hot potato: of Mr. Cohen's bets last year was a surprisingly conventional, straightforward one: he accumulated a large share of Google in the months after its public offering in 2004, accumulating 3.4 percent of the stock by February, when the stock was trading for $100 to $200.

People who invest with Mr. Cohen say that at the root of his success is an uncanny ability to pick the perfect time to buy and sell a stock. If a stock is going up, he holds on; if he gets the sense that a stock will drop 5 percent one day, even if its long-term prospects remain solid, he will sell, knowing that he can re-establish a position at some later point.

Google would seem to be a case in point. He rode the stock up, but bailed out as it hit higher, more volatile levels. Recent filings show that he owns just 0.02 percent of the stock.

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