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We don't know what the strategies are so we aren't in a position to evaluate their alpha. Second, the Medallion fund cherrypicks the best strategies, so we don'

We don't know what the strategies are so we aren't in a position to evaluate their alpha. Second, the Medallion fund cherrypicks the best strategies, so we don't know what the global return is, just the Medallion return, which is reported for PR purposes. To the extent that the strategies have been revealed, as in this Senate report, the strategies rely on fraud and illegal levels of leverage.

whatok 9y ago
How are you evaluating their alpha then?
dsacco 9y ago
> We don't know what the strategies are so we aren't in a position to evaluate their alpha. If that's the stance you want to take, it works both ways. You are no more qualified an outsider than anyone else to evaluate their strategies. But given the available evidence, your position is on shaky ground. > Second, the Medallion fund cherrypicks the best strategies, so we don't know what the global return is, just the Medallion return, which is reported for PR purposes. To the extent that the strategies have been revealed, as in this Senate report, the strategies rely on fraud and illegal levels of leverage. This is more complicated than you imply. Medallion uses strategies which have lower capacity constraints and risk, which is why only employees are allowed to invest in it (they don't need outside capital, and they don't need to share risk with investors). Renaissance could close up shop to the outside world completely, but the fact remains that if they are consistently developing strategies for Medallion, they are consistently developing alpha. This alpha is not nullified because they have other strategies that perform worse, because on any realistic timeline they can abandon one and favor another. They would simply not use the strategies which they feel require risk pooling (i.e. capital from outside investors). Furthermore, the returns are reported by various news outlets which do get to audit them, even if the general public cannot. If you're willing to pay for the information from hedge fund performance indices, you can get it. Which circles back to my original point - regardless of where you stand on the strategies documented in the Senate report, Renaissance has enjoyed those returns both before and after the use of the tax maneuvering. Leverage does not create alpha or consistency on its own, it only amplifies the returns (positive or negative) thereof. To make my position very clear: again, I'm not saying I agree with the tax maneuvering; I simply disagree with your dismissive characterization of the firm's returns.
jandrese 9y ago
Wait, are you saying that they created a "PR" fund that regular people can't invest in that has higher returns because it's only made up of funds that had high returns this year? If so, where do the "loser" funds go? The clients?

whatok 9y ago

How are you evaluating their alpha then?

dsacco 9y ago

> We don't know what the strategies are so we aren't in a position to evaluate their alpha. If that's the stance you want to take, it works both ways. You are no more qualified an outsider than anyone else to evaluate their strategies. But given the available evidence, your position is on shaky ground. > Second, the Medallion fund cherrypicks the best strategies, so we don't know what the global return is, just the Medallion return, which is reported for PR purposes. To the extent that the strategies have been revealed, as in this Senate report, the strategies rely on fraud and illegal levels of leverage. This is more complicated than you imply. Medallion uses strategies which have lower capacity constraints and risk, which is why only employees are allowed to invest in it (they don't need outside capital, and they don't need to share risk with investors). Renaissance could close up shop to the outside world completely, but the fact remains that if they are consistently developing strategies for Medallion, they are consistently developing alpha. This alpha is not nullified because they have other strategies that perform worse, because on any realistic timeline they can abandon one and favor another. They would simply not use the strategies which they feel require risk pooling (i.e. capital from outside investors). Furthermore, the returns are reported by various news outlets which do get to audit them, even if the general public cannot. If you're willing to pay for the information from hedge fund performance indices, you can get it. Which circles back to my original point - regardless of where you stand on the strategies documented in the Senate report, Renaissance has enjoyed those returns both before and after the use of the tax maneuvering. Leverage does not create alpha or consistency on its own, it only amplifies the returns (positive or negative) thereof. To make my position very clear: again, I'm not saying I agree with the tax maneuvering; I simply disagree with your dismissive characterization of the firm's returns.

jandrese 9y ago

Wait, are you saying that they created a "PR" fund that regular people can't invest in that has higher returns because it's only made up of funds that had high returns this year? If so, where do the "loser" funds go? The clients?