Renaissance Technologies

For the most part, 2013 was not kind to Steve Cohen. The Feds put his balls in a jar and put that jar on Preet Bharara’s desk. One of his ex-employees went to trial for (and was later found guilty of) masterminding the “most lucrative insider trading scheme ever.” Other former traders helped bring the number of SAC alums indicted on securities fraud charges to nine. His genius idea to give out free hot dogs on the front lawn of SAC HQ failed to prevent a number of departures. He lost his biggest fan. For a lot of hedge fund managers, all of this would add up to moping around the office and turning in less than stellar work. For Steve Cohen, it meant turning up the Styx and getting down to business. Read more »

  • 01 Jul 2013 at 10:13 AM

Renaissance Technologies: Buy-And-Hold Investor

You can think of a margin loan as being like an option on the underlying security: if I lend you $50 (nonrecourse) against a $100 share of stock, and tomorrow the stock is worth $45, then you’ve lost $50 and I’ve lost $5, same as if I wrote you a $50 strike put option on the stock.1 This isn’t quite right – margin calls, etc. – but what it lacks in precision it gains in tax efficiency:

James H. Simons, who became a billionaire when he turned his extraordinary mathematical ability from defense work to investing, has deployed an unusual strategy at Renaissance Technologies LLC to skirt hundreds of millions of dollars in taxes for himself and other investors, said people with knowledge of the matter.

The Internal Revenue Service is challenging the technique, which it called “particularly aggressive,” without identifying the hedge fund in the dispute. … Renaissance’s strategy involved buying an instrument called a “basket option contract,” from banks including Barclays, the people said.

That’s from today’s wonderful Bloomberg article about the IRS’s investigation. Here’s the IRS memo about the trade. Here’s the trade.2 Actually wait: here’s the trade, twice. You can just read down the left side if you enjoy getting mad at evil tax-dodging hedge funds, or just read down the right side if you don’t want to believe that Jim Simons could ever get up to no good:
Read more »

Overtime that was not for naught! Thanks to labor laws protecting LBBs, Tepper took home $2.2 billion last year. Other people who made some money in 2012: Read more »

Something we’ve long-maintained around the Dealbreaker office is that hedge fund manager Jim Simons would make a great fairy godmother, what with his soothing voice, white beard, and the fact that he’s really just a lovable math teacher who happened to make a zillion dollars by tinkering away the computers in his garage and would be happy to lend the powers of his magic cigarette wand to those in need.  So we were extremely pleased to see our fantasy brought to life by way of an anecdote from Scott Patterson’s new book Dark Pools, in which Simons seems to appear out of nowhere, just like a FGM would, sprinkles unexpected gifts on a young man and woman (of both hope* and nicotine), and then disappears as quickly as he came via golden carriage. (We also appreciate that Simons is the kind of FGM that will laugh in your face as you explain to him what a quant fund is, not realizing you’re talking to a guy who’s got some experience there.) Read more »

Dear Tudor, RenTec Investors

January performance. Read more »

  • 10 Jan 2012 at 10:41 AM

Which Hedge Funds Were Most Profitable In 2011?

The latest issue of Bloomberg Markets magazine has the answer to that burning question but first, let’s take a gander at who had the best performance, among large hedge funds.

1. Tiger Global, YTD total return: 45% (assets, in billions: 6.0)
2. Renaissance Institutional Equities, 33.1% (7.0)
3. Pure Alpha II, 23.5% (53.0)
4. Discus Managed Futures Program, 20.9% (2.5)
5. Providence MBS, 20.6% (1.3)
6. Oculus, 19.0% (7.0)
7. All Weather 12%, 17.8% (4.4)
7. Dymon Asia Macro, 17.8% (1.6)
10. Citadel, 17.7% (11.0)
11. Coatue Management, 16.9% (4.7)
12. Stratus Multi-Strategy Program, 16.6% (3.7)
13. OxAM Quant Fund, 16.4% (2.0)
14. SPM Core, 15.7% (1.0)
15. Pure Alpha I, 14.9% (11.0)
16. Autonomy Global Macro, 13.9% (2.1)
17. BlackRock Fixed Income Global Alpha, 13.8% (2.4)
18. SPM Structured Serving Holding, 13.5% (1.6)
19. GSA Capital International, 13.0% (1.0)
20. JAT Capital, 12.7% (2.5)

And for those who judge themselves by how many bags of hundos they’ve got to strip naked and roll around in: Read more »

  • 09 Jan 2012 at 5:59 PM

Dear Tudor, RenTec Investors

December performance. Read more »