RenTech Brings up the Rear in ‘07 Performance Derby

Renaissance Technologies, a hedge fund so cocky that it mocks bloggers who speculate on how it engineers its algorithms, lost money in 2007 as it posted its worst year since its founding.

US firm Renaissance Technologies, regarded as the world’s most successful hedge fund manager, recorded its first annual loss on a hedge fund since 1988 as its Renaissance Institutional Equities Fund fell almost 1% last year.

The fund, which the firm launched in 2005 saying it had a capacity of $100bn (€68bn), five times larger than any other hedge fund, lost 0.95% in the 12 months to the end of December, according to a person who has seen the fund’s results. Financial News

Simons and RenTech also run the Medallion Fund, which is open to employees only, and does not divulge its numbers. But their Institutional Equities Fund (RIEF) opened eyebrows when they set their sights on raising $100 billion for RIEF, which they assumed the fund could scale up to without comprising its style strategy. But those lofty numbers could remain a pipe dream if they cannot get the performance overhauled, and have been getting redemption requests…

The firm, founded by former professor of mathematics Jim Simons, has raised $26bn for the Renaissance Institutional Equities Fund, which is also a computer-driven fund but which has a target of outperforming the US equity market, rather than an absolute return target. But investors have asked to redeem $4bn of their capital, according to Reuters, citing a person familiar with the fund.

Still, hedge funds seem to delivering on the promises despite a barrage of media publicity that has largely focuses on what went wrong in 2007. Although Ken Heebner put up a memorable year, most mutual funds were well below his roughly 80% gain last year. But some of the largest hedge funds in the world put up stellar performance, and we might have to reconsider our position that the Tiger Cubs are overrated, they shot the lights out last year. Nice work, Chase Coleman.

Bloomberg has the rundown on the the performance derby, and given the numbers it would seem many folks are doing just fine. It would seem that common sense and fundamental research can trump a blind reliance on alorithms after all. Lets see if the can keep it going in 2008.

Paulson merger arbitrage 52.0%
Paulson event arbitrage 100.0%
Paulson Credit Opportunities 589.9%
Paulson Credit Opportunities II 351.8%
(Paulson & Co., New York)

Global Alpha -38.0%
Global Equity Opportunities -30.0%
(Goldman Sachs Group Inc., New York)*

* Goldman’s Global Alpha loss is through Dec. 28. Global Equity
Opportunities loss is through Nov. 30.

JPMorgan, Renaissance Trail Hedge-Fund Gains in 2007
Bloomberg

Renaissance makes first loss in 20 years
Financial News Online

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