Does SAC now stand for Steven Activist Cohen? The hedge fund manager, famous for huge returns from quick-fire trading, recently told the Wall Street Journal that the days of that approach were numbered. On the face of it, SAC’s aggressive stance on Phelps Dodge is a test case for his new strategy of making bigger bets and holding them longer.

SAC says it plans to vote against Freeport’s takeover of rival copper producer Phelps – using the 5.1 per cent stake (largely in options) it has built since the deal was announced. However, the idea that SAC is gearing for war should be taken with a pinch of salt. Given that no other bidder has emerged for Phelps during many months of vulnerability, scuppering the deal would be a huge risk. Phelps’ shares would presumably plunge. Other shareholders would be unlikely to take such a gamble.

More likely, Mr Cohen is making a reasonable bet. If the deal goes through on current terms early next year, he stands to make a nice return as the spread closes. Phelps currently trades about 4 per cent below the value of the offer, but the gap has been significantly higher.

There is the added chance that, in today’s exuberant debt and metals markets, Freeport could feasibly be pushed higher. Freeport is certainly keen to reduce its huge exposure to politically-risky Indonesia, but it has a pretty good hand unless another suitor for Phelps emerges.

SAC’s biggest risk may be that somebody else scuppers the deal by bidding for Freeport. Mr Cohen has shown with Time Warner he is willing to hold a stock for many months. But he is playing a new game. If Freeport disappeared and Phelps’ shares tumbled, it really might require a long-term, active commitment to get back near Monday’s price.

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