they talked about this on the Masters in Business podcast on Oct 30th. pretty interesting stuff.
https://www.bloomberg.com/opinion/articles/2019-11-01/rithol...
Direct download: https://traffic.bloomberg.fm/BLM3980613543.mp3
Renaissance Technologies
41–50 of 261 posts
Re: Renaissance Technologies
#42Earlier quoted context omitted.
It seemed that all hedge funds in Billions were trading in insider information. It does seem prevalent, but I am not personally in the industry at all: https://medium.com/@malwarwick_98471/insider-trading-in-the-... https://en.wikipedia.org/wiki/Steven_A._Cohen
You can also see them trading on non-public information they get trough other channels. I think that's more normal. In real life you can't run a fund by finding insiders willing to commit crimes routinely. But you often can get the same information by other means by collecting intelligence. Observing traffic, the flow of materials, following people and finding who meets who.
Yes^. RenTech and lots of other funds routinely source non-financial data to back out nonpublic information. It's not illegal and it's not unique to them. Examples are things like real estate documents, weather data, public activities of executives, satellite imagery, credit card transactions (Second Measure), DNS data, location data (Thasus, Foursquare), etc...
Re: Renaissance Technologies
#43A great book about RenTec and Jim Simons came out recently: The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution. Everyone in the industry worships Simons and RenTec as practically god-like. What they've managed to do shouldn't really be possible and is out of this world. According to Wikipedia over a 20 year period between 1994 and 2014, RenTec realized an 71.9% annualized return in their inte…
They are being sued for back taxes to the tune of $6.8 billion. So this may not be as legit as it seems.
That $6.8 billion is nowhere near the total returns generated by Medallion over its lifetime. I agree the basket option scheme with Deutsche was questionable financial engineering, but the tax implications could at best augment the returns of an already profitable strategy. You cannot account for ~40% annual average returns over 30 years (after 5% management and 44% performance fees) using clever tax evasion.
Re: Renaissance Technologies
#44Renaissance Explores Settlement as IRS Seeks Billions in Taxes https://www.bloomberg.com/news/articles/2019-04-10/renaissan...
Related HN discussion from 9 months ago:
https://news.ycombinator.com/item?id=19063977
Re: Renaissance Technologies
#45A 66% annualized return over 30 years - from a completely opaque investment strategy. Extraordinary result for sure, how did he do it? Run by Robert Mercer, the money man who associated with prominent money launderers. Based on my priors, Occams Razor says Rentech is a laundromat, not a hedge fund.
It's not run by Robert Mercer. He's no longer a co-CEO. And if that's your conclusion, you should probably reexamine your priors.
Right, it's run by his designated successor, whose wealth comes from Mercer's "trading strategy".
Re: Renaissance Technologies
#46Note that RenTec also runs two other funds that are larger than the Medallion Fund, but both under perform the index. On a completely unrelated note, if I were interested in creating a fund that appeared to have market beating returns for decades and I wasn't concerned about the legal consequences, here's one way I might do it: I would create fund A and B and seed them with some initial capital. For fund A, I would c…
Aren't SEC whistleblower awards setup to combat the scenario you're proposing? The first individual to defect would presumably earn vastly more money than continuing with the scheme.
Re: Renaissance Technologies
#47A great book about RenTec and Jim Simons came out recently: The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution. Everyone in the industry worships Simons and RenTec as practically god-like. What they've managed to do shouldn't really be possible and is out of this world. According to Wikipedia over a 20 year period between 1994 and 2014, RenTec realized an 71.9% annualized return in their inte…
> here's no outside investors in the Medallion fund anymore, so if it is a scam, they would only be scamming their own employees The "it's a scam" theory that I heard had nothing to do with it being a Ponzi scheme, instead it was about laundering high-tax income into low-tax capital gains while maintaining a plausibly deniable investment cover story. It didn't have to beat the market, it just had to beat regulators.…
But how exactly would this laundering work ?
Re: Renaissance Technologies
#48Note that RenTec also runs two other funds that are larger than the Medallion Fund, but both under perform the index. On a completely unrelated note, if I were interested in creating a fund that appeared to have market beating returns for decades and I wasn't concerned about the legal consequences, here's one way I might do it: I would create fund A and B and seed them with some initial capital. For fund A, I would c…
To be frank, running this sham for 30 years sounds less plausible to me than beating the market the boring way.
How would you stop investors in your two public funds (and their accountants) from asking pointed questions about disbursements from one fund to the others? Do you plan to fool them for this amount of time, or bring them into the conspiracy?
And how will you sustain the conspiracy when your other two funds trail the market index by a lower combined differential than your other, internal fund is beating the index? Will you initiate a Ponzi, or something else?
There is a more realistic angle to attribute RenTech's returns to fraud. I don't personally believe it as I have friends there, but I believe it would technically work:
A nontrivial number of RenTech's employees have come from the intelligence apparatus of the United States; namely the NSA. Simons was particularly affiliated with them early on in his math career. It strikes me as plausible (but again, highly unlikely) that if RenTech is is a conspiracy, it is a conspiracy sponsored by US intelligence. They would have the capability to run a 30 year secretive conspiracy, and they would have they desire to attract top talent in math, physics and computer science.
But I'm just speculating for fun year. I really don't think there's any conspiracy :)
Re: Renaissance Technologies
#49So much negativity in this thread. We fear or doubt what we do not understand I guess.
Re: Renaissance Technologies
#50I use to service pools back in high school on the north shore of long island. And I remember doing Simons house, unbelievable property. The house keepers house was 5x bigger then mine..and the pool was massive, right on the edge of a cliff overlooking the long island sound. Sry if its offtopic but this read made me think of it!