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Bloomberg referred to Renaissance Technologies as “the best hedge fund in the world” and was founded in the 1980s by billionaire and mathematician Jim Simons. The Wall Street Journal describes him as “the best Wall Street investor of the time” and, according to Forbes USA’s 21st richest person, has a net worth of $ 21.6 billion.
The hedge fund, which, according to WSJ, manages around $ 75 billion, uses algorithms to systematically find profitable patterns and thus make big money.
The flagship company, the fund known as the Medallion, was established in 1988 and is reserved for employees, former employees, and individuals associated with the company. In other words, it is very exclusive, and not to mention profitable.
From New Years to April 14, the portfolio performed 24 percent, writes WSJ.
In March, when stock markets around the world collapsed, the portfolio rose 9.9 percent. In comparison, the broad S&P 500 index on Wall Street fell 11.4 percent from New Years to mid-April. According to the Wall Street Journal, the Medallion has almost $ 10 billion under management.
Continuous questioning increase
The wild boom occurs even after taking into account the high management fees. According to WSJ, Medallion takes 36 percent of the return, plus five percent of all funds injected into the fund.
If fees are removed, the portfolio has a 39% return from New Year to April 14. Despite the high fees, investors do not experience difficulties. The fact that the Medallion is owned by the employees means that the fees will be charged again.
Still, that doesn’t mean everything is rosy in the mysterious hedge fund. At one point in March, the Medallion risked a loss for the year, before the arrow pointed sharply toward the end of the month. Sources close to the company WSJ has been in contact with have stated that the market crisis is questioning whether the recent rise may continue at the same speed in the future.
Sunken external bottom
In addition to Medallion, Renaissance also has funds available to outside investors. But they still haven’t done so well.
According to investors, The Renaissance Institutional Equities (RIEF), which is trading in US stocks and is targeting index-linked performance, is down 10.4 percent from New Years through April 14.
According to Bloomberg, RIEF fell 14 percent in the first quarter of 2020, but has rebounded well so far in April with a five percent return for Monday this week.
In a report, Renaissance writes that its advanced analytical systems “collapsed” in March, when the stock market crisis was worst. The same happened with the fund in 2007, when the so-called subprime crisis started the financial crisis.
– Rebirth is not magic. If Martians invade Earth, they have no model, says Nick Patterson, a former hedge fund manager, according to Bloomberg.
Renaissance is one of the most respected hedge funds on Wall Street, but also one of the most secret. According to the Financial Times, quarterly reports on hedge fund managers’ capital positions are one of the few ways to monitor what is bought and sold.
Unlike all the brokerage houses, banks, and foundations on Wall Street and Manhattan, the Renaissance is far beyond the financial capital, in rural Long Island. Here are the fund’s employees, who also have a slightly different profile than many economists and analysts at other funds. Most of Renaissance’s employees are physicists, mathematicians, and statisticians, and they run so-called “quantum” commerce, where algorithms and computer systems control the company’s strategies and commerce.
The hedge fund has built much of its reputation on the aforementioned Medallion, which between 1988 and 2018 had an average annual return of 40 percent after fees. (Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We want you to share our cases using a link, which links directly to our pages. Copying or any other use of all or part of the content may only be made with written permission or as permitted by law. For more terms see here.
