Is Renaissance Technologies really a hedge fund?

Soy's picture
Rank: Monkey | 56

Is Rentech really a hedge fund?

Does anyone have any thoughts on this though?

renaissance technologies

Renaissance Technologies is a company by and for scientists. They boast that there is no hiring MBAs. They employ mathematicians, physicists, signal processing experts, and statisticians.

Not much is known about their strategies besides their focus on mathematical models and programming. They are the second largest hedge fund by AUM. They currently have 84 billion under management.

from certified user @GoodBread on founder and and manager Jim Simons.

Generally speaking, his team looks for statistical patterns that can be exploited and uses a modified Kelly Criterion to size trades. He's been managing mostly his own money for 30 years and compounding at 40% does wonders for your bank account.

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Comments (46)

Nov 10, 2008

all of the top prop shops are market makers. what makes rentech not a hedge fund from what you described?

Nov 10, 2008

Rentech, Deshaw, and Citadel are notorious for their high frequency stat arb. This doesnt really come at a suprise to me as they have the best hardware, best software, best talent out there. Its true you dont need to know finance to make a killing. I think the analogy of picking up pennies is dead on. I dont quite understand what there risk is when a trade moves against them in the seconds they do hold positions. I assume the computer just takes the small loss and continues picking up pennies.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Nov 10, 2008

RenTec's Medallion fund is up 50% this year. That's the flagship. I don't know how you "found out" what you did about RenTec, but it's pretty clear they're not doing extremely long-term stuff in Medallion. I doubt your trader friend could really volunteer muc information unless he wanted to be fired. REIF probably does standard value/momentum and some other games that weren't profitable enough for Medallion.

Nov 10, 2008

Soy you are a moron. go read up before you ask such stupid questions.

May 13, 2019

Just you are a moron. No such thing stupid q, you are stupid. Just you read before saying anything, idt nerx, cepu, think, say, can think, say, ask any no matter what and any is ok

Funniest
May 13, 2019

Did you really just create a new account to lob an incomprehensible insult at a Bush-era internet post?

bro

    • 2
Nov 10, 2008

But, I noticed that a lot of people want to get into these hi frequency stararb shops, but there must me more to it, right,? But there seems to be a hype on forums like these about how rentech coders must be absoute geniuses. FYI, my friend who does EXE form RenTech didn't actually divulge any "confidential info" or any shit like that. Technically, you don't violate contract unless you reveal "confidential information The risk is that since the differnences in the bid-ask are minimal, leverage must be used to magnify the gains on paper. But there strat is VERY confusing. I understand they create covariance matrix for a bunch of assets, then what?

I picked up some goo 'ole fashion litigation:

http://www.briefworks.com/RenaissanceDecision.pdf

"Stupidity is the only thing in American not imported from China"

Nov 10, 2008

rentech=fooled by randomness (volatility)

"Stupidity is the only thing in American not imported from China"

Nov 10, 2008

high frequency stat arb is the closest thing to printing money in the markets that I have ever seen besides actually printing it at the treasury. There are ridiculous barriers to entry for this business model however so dont expect to ever replicate it in your PA.

As far is where is the value added by the employees thats really a mystery. If I had to guess I would say finding new arbs that the market hasnt found yet. I once created a thread about the appeal of the mega funds but that created controversy when x13 and ideating hijacked the thread.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Nov 11, 2008
trade4size:

high frequency stat arb is the closest thing to printing money in the markets that I have ever seen

stat arb = sophisticated scalping???

Jun 30, 2009

Once you differentiate between Medallion and the other funds it becomes clearer. I don't know much about Medallion so I won't talk about it but I have seen the marketing materials for a few of their equity funds and it's not particularly impressive. It struck me as the RenTech institutional arrogance believing it could stretch timeframes, use different theories (momentum and valuation) and still achieve similar results. Of course, returns in 07 and 08 have completely sucked - the real story is now that they've been exposed, can they recover or is the idea destined to be a leveraged long only fund?

trade4size:

high frequency stat arb is the closest thing to printing money in the markets that I have ever seen besides actually printing it at the treasury. There are ridiculous barriers to entry for this business model however so dont expect to ever replicate it in your PA.

As far is where is the value added by the employees thats really a mystery. If I had to guess I would say finding new arbs that the market hasnt found yet. I once created a thread about the appeal of the mega funds but that created controversy when x13 and ideating hijacked the thread.

Uhhh... I remember you deleting that thread because you got mad that some people called you out on your massive insecurity in the content of it clouding your judgment.

What I wrote: "Trade4size, don't know if I remember the details right but getting a shitty GPA at a non-target and interning at a MM tells the story more that the big firms didn't want you rather than you didn't want the big firms. Don't mean to attack you but if you are going to talk about "bucking the trend" etc. when you have done very little so far... not a flattering picture."

What x13 wrote: "this thread just reeks of inferiority complex as do most of your threads trade4size, no offense. this post is of the same vein of your "what makes a good trader". stop trying to justify urself because not only are the answers to such questions exactly what u dont want to hear, its all quite obvious. like ideating said, your argument has no gravity when you lacked choice in your ultimate decision. and fyi i work for a MM bank as well"

It wasn't hijacking at all, it was people saying that you had a tremendously biased perspective in your assertions.

Nov 11, 2008

high frequency stat arb yes I guess you could say is a sophisticated scalping method. I dont really know much about it, the desk I was on this summer did a lot of stat arb execution for hedge funds but it was not high frequency like deshaw, rentech, Citadel do.

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Nov 21, 2008

I know a math PhD at rentec and this confirms much of what he's told me. I would still call it a hedge fund, just different from most.

Nov 21, 2008

Rentec has recruited the best programmers from TopCoder, which is a speed algorithmic coding competition that occurs weekly. I've tried it, but the algorithms are pretty tough. Do a search on google for 'rentec topcoder'.

Nov 21, 2008

Thx aachimp, TC looks interesting

http://www.afr0jacks.com/ Afro Jacks

Nov 22, 2008

If you really wanna get technical about it, James Simons actually was just doing prop trading by Technical analysis when he first started Rentech. They only moved inot the more quantitative "market-making" stuff later [although obviously that is where most of their dough is from by now]

Nov 22, 2008

Without going into math jargon, this statement is true. Although he didn't technical trade in the traditional aspects. He used convergence trading, or pairs trading. As they got big, they were able to market make, and that's how they most of their money. They only hire people with Masters or PhDs, preferably in sci, math, econ, or econometrics. I've never heard of undergrads at rentech, unless you're a genius, or something. I mentioned earlier that learning finance isn't relevant, as the edge is in faster execution. I wonder what'll happen once vega is scarce, but I doubt thats gonna happen

http://www.afr0jacks.com/ Afro Jacks

Nov 26, 2008

Soy you really have no clue what you are talking about, do you? First of all, there are 85 ren tec partners, though that number may have increased over the past year through the expansion of their hiring to INCLUDE UNDERGRADUATES. Your description of the strategies this firm executes couldn't be farther from the truth. You really have no concept of what quantitative trading is so try to stick to something you know (if that is anything). Faster execution? lets see here, all quant funds have servers racks at the exchanges, so latency is really not that much of an issue. Jim Simons told me himself that there are no traders for the medallion and if I remember correctly any of the other funds. There has been human intervention once since the inception of the funds and that was during august 07. Next time when you have a load of bullshit, keep it to yourself instead of trying to impress random people on a forum by providing them with misinformation. It appears you don't really understand the greeks either.

Nov 22, 2008

Does Rentech hire bankers(etc) or is it only math PhDs, engineers etc who get hired?

Nov 26, 2008

mcgyver, youre wrong, and simmons 'talked' to you?

http://www.afr0jacks.com/ Afro Jacks

Nov 28, 2008

No, I know for a fact I am not wrong. Yes I have spoken with simmons on a few times at events. Considering the fact I also know a former ren tec partner, I would say I am far more qualified to speak than you, especially considering the fact that you are a clear outsider to the quant scene.

Nov 28, 2008

Of course, Rennaissance is a hedge fund: This is from their homepage:
"Renaissance Technologies is a Global Hedge fund management firm with a long record of producing superior returns for our clients by adhering to mathematical and statistical methods in the design and execution of our investment programs..."
www.rentec.com

Also, it is foolish to think they make most of their money as market makers (though they certainly make some). Any firm that makes thousands of trades and claims to being doing arbitrage is lying if their funds are down 10% or more in a year. Think about it, market makers do get hit by volatility, but it shouldn't be directional and correlated so heavily with market direction.

Nov 29, 2008
mtomarket:

Also, it is foolish to think they make most of their money as market makers (though they certainly make some). Any firm that makes thousands of trades and claims to being doing arbitrage is lying if their funds are down 10% or more in a year. Think about it, market makers do get hit by volatility, but it shouldn't be directional and correlated so heavily with market direction.

what are you talking about?

Both of their client funds are down massive this year because they save their best strats for Medallion. Afaik, Medallion is up this year.

Nov 28, 2008

(1) create covariance matrix for a basket of assets (let's assume equities)
(2) calculate the eigenvectors and eigenvalues
(3) try to forecast the behavior of the eigenvectors of the largest eigenvalues, and do long-short basket trades to trade these eigenvectors.

Nov 29, 2008

You have no idea what you're talking about, Monst4r.

http://www.afr0jacks.com/ Afro Jacks

Nov 29, 2008

ffs, his name is simons not simmons. i have a hard time believing both of you although mcgyvers info is correct.

Nov 29, 2008

Medallion is mostly his personal money and employees money im guessing?

"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.

Nov 29, 2008
trade4size:

Medallion is mostly his personal money and employees money im guessing?

Medallion is ONLY his personal money and employees money.

Nov 29, 2008

I know its not ONLY partner money since in his speech during the hf manager hearing in the house he said "the majority of the money invested in Medallion" is his personal and partner money. I apologize for my earlier typo of simons.

Nov 30, 2008
Jan 16, 2009

I am glad I stumbled across this thread, and find it even greater bright people really try to gain understanding of Medallion's strategies.

But given that Mr Simons is very secretive about his operation, and all employees will probably watch their mouth when speaking about it, it seems very likely that Soy and McGyver tried their best to make an honest assumption about Medallion, but it only is this - an assumption.

Jim Simons himself said he and his team are often amused to read what they are supposedly doing in their Medallion fund, strategywise.

Do any of you people have detailed information about figures beyond the annual average performance? Like max. drawdown, volatility and assets it started with in its inception year. I also think I once read Medallion actually lost money in its very first year, is their any truth to it?

Jun 30, 2009

Anyone know the Medallion's 2009 progress? I am guessing they are going to take a big hit if not this year, then soon. Heard they came out on top in 2008 but lost big in REIF and RIFF is this indeed true? Anyone have any color on 2009?

Jun 30, 2009
dr_sean:

Anyone know the Medallion's 2009 progress? I am guessing they are going to take a big hit if not this year, then soon. Heard they came out on top in 2008 but lost big in REIF and RIFF is this indeed true? Anyone have any color on 2009?

Here's the REIF (down like usual): http://dealbreaker.com/2009/06/02/chart.php
..I think medallion is their only fund in the positive for the year, but can't find the return percentage. I'll try to find it.

Jul 2, 2009

They are a hedge fund technically, but more like a nerdy type big swinging dick collective

Jul 2, 2009

No one outside of RenTech knows what RenTech does. If anyone claims that they do, then they're lying.

The fact of the matter is that RenTech is the most successful and secretive money-manager in history. There's no point speculating as to what it is they do, because at the end of the day, it's a waste of our time. This is why people like to talk about buffet being the most successful money-manager in history. Buffet is not even in the same league as RenTech, but at least talking about Buffet and his strategy actually yields something.

Jul 2, 2009

They use quant strategies. You shouldn't worry about that.

Jul 2, 2009

Probably a part of their success is the fact that everyone keeps their mouth shut and don't really share anything.

Jul 2, 2009

Latency arbitrage before it was cool.

Jul 2, 2009

its been discussed here before but since they are more or less a giant prop shop now they dont have to invest when they dont see a reason too nor do they have limits on leverage or whatever

they can lever up and load the boat when the odds look good and take on massive risk without upsetting outside investors

i have no idea what they do but id be willing to bet that is part of it. they have enough of their own $$ under management

alpha currency trader wanna-be

Jul 2, 2009

Has their performance in the last ~7 years been extraordinary? Does anyone have numbers? I am under the impression that they outperformed in '08 and have been doing good but not great since then.

Jul 2, 2009
undefined:

Has their performance in the last ~7 years been extraordinary? Does anyone have numbers? I am under the impression that they outperformed in '08 and have been doing good but not great since then.

And how could you possibly know this? Are you personal friends with Jim Simons?

Jul 2, 2009
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