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If Rentech has a strategy which generates decent returns only with massive and illegal levels of leverage, it does not have a viable strategy, period. There ar

If Rentech has a strategy which generates decent returns only with massive and illegal levels of leverage, it does not have a viable strategy, period. There are reasons why hedge funds have leverage limits, to prevent future LTCM catastrophes. If Rentech wants to operate as a market maker it can get a broker dealer license like any other firm operating as a market maker.

dsacco 9y ago
> If Rentech has a strategy which generates decent returns only with massive and illegal levels of leverage, it does not have a viable strategy, period. And in my previous comment to you, literally the one you replied to, I explained that this is not the case. Re-read my comment. Their strategies have alpha distinct from the leverage (because, again, leverage is not alpha), both historically before the tax maneuvering began, and since the conclusion of its use.
- soniman 9y ago
  We don't know what the strategies are so we are not in a position to evaluate the alpha. See the protasis of my statement, beginning with "if".
  - dsacco 9y ago
    > We don't know what the strategies are so we are not in a position to evaluate the alpha. Then neither are you, and this entire discussion becomes rather meaningless, wouldn't you say? What we do have are public numbers that indicate, whatever the strategies may be, their returns exist independent of tax-advantaged leverage.
  - darawk 9y ago
    Yes we are. The fact that their returns have been consistent regardless of market regime is clear evidence of alpha regardless of leverage. We don't need to know what their strategies are to know that.
  - dna_polymerase 9y ago
    Okay, as someone else already pointed out to you: How can you be so sure about your argument? This said, please elaborate, how exactly could they turn a strategy losing them money around by pumping more money into that?
    - soniman 9y ago
      If a strategy consistently generates 2% on capital, it can be pumped up to 30% return on capital if 15x leverage is used. There are obviously laws against that, which Rentech evaded. The details of Rentech's criminal activity is in the Senate report. The billionaire ball lickers don't like hearing words like "criminal" and "fraud" about their hero but the Democrat-run Senate would not put out a report like that about a major donor if the activity were not serious.

dsacco 9y ago

> If Rentech has a strategy which generates decent returns only with massive and illegal levels of leverage, it does not have a viable strategy, period. And in my previous comment to you, literally the one you replied to, I explained that this is not the case. Re-read my comment. Their strategies have alpha distinct from the leverage (because, again, leverage is not alpha), both historically before the tax maneuvering began, and since the conclusion of its use.

soniman 9y ago
We don't know what the strategies are so we are not in a position to evaluate the alpha. See the protasis of my statement, beginning with "if".
- dsacco 9y ago
  > We don't know what the strategies are so we are not in a position to evaluate the alpha. Then neither are you, and this entire discussion becomes rather meaningless, wouldn't you say? What we do have are public numbers that indicate, whatever the strategies may be, their returns exist independent of tax-advantaged leverage.
- darawk 9y ago
  Yes we are. The fact that their returns have been consistent regardless of market regime is clear evidence of alpha regardless of leverage. We don't need to know what their strategies are to know that.
- dna_polymerase 9y ago
  Okay, as someone else already pointed out to you: How can you be so sure about your argument? This said, please elaborate, how exactly could they turn a strategy losing them money around by pumping more money into that?
  - soniman 9y ago
    If a strategy consistently generates 2% on capital, it can be pumped up to 30% return on capital if 15x leverage is used. There are obviously laws against that, which Rentech evaded. The details of Rentech's criminal activity is in the Senate report. The billionaire ball lickers don't like hearing words like "criminal" and "fraud" about their hero but the Democrat-run Senate would not put out a report like that about a major donor if the activity were not serious.