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Ex-SAC Hong Kong trader readies hedge fund to bet on price swings

(Reuters) – Miaodan Wu, a former portfolio manager at billionaire Steven A. Cohen’s hedge fund SAC Capital Advisors, is preparing to launch his own hedge fund in Hong Kong to bet on price swings in financial securities, people familiar with the matter told Reuters.

Wu was among at least seven SAC Capital staff who left Hong Kong this year, at a time when Cohen and his firm are drawing increased scrutiny in the U.S. government’s long-running investigation into insider trading.

Known in the industry as “Dr Wu,” his hedge fund, named Bach Option, will launch by the end of 2013, said three sources who could not confirm the start-up capital as the plan was at an early stage. The amount of money he plans to raise is not yet clear.

The hedge fund will bet on volatility, which refers to the rate of change in the price of a financial asset.

That strategy is currently out of favour as volatility has collapsed due to quantitative easing by central banks, though it helped Artradis Fund Management grow into a $4.5 billion hedge fund in Asia during the financial crisis, making it the most successful volatility hedge fund in Asia ever.

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