> Then he empirically disproved the strong-form EMH
Not clear as we do not really know exactly how RenTech works. It is believed that there are substantial tax loopholes that were taken advantage of - which would go a long way (not all the way) to explaining the incredible performance of his fund.
Every serious finance company knows how to optimize taxes.
Simons was returning 25-50% on 8BN AUM at Medallion every year with one or two exceptions every year for 30 years.
Even the hedge funds we let openly operate with black edge in plain sight can rarely do that for 3-5 years.
It’s obviously debatable unless they open the books, but it’s pretty much common knowledge which funds are bending the rules (flagrantly violating securities law), and I’m unaware that Medallion was anything other than just there first.
> Rentec gets a lot of leverage and gets ridiculous pricing on option trades from the banking desks because of the flow they bring.
So do about 200 other funds world wide. Their leverage and sell side pricing isn't what makes them successful, as most other large funds trade as much as them and get atleast the same pricing as they do.
RenTec’s volume is much higher. They are the sheikhs of the street.
Leverage makes a huge difference. If a strategy nets on average 0.1% a day and if RenTec can trade at 2x more leverage than their counterparts, they will post 60% pa vs 30% pa.
RenTech trades far less than many of the market makers in the US, and they get the same funding rates as the rest of the big players. I don't know their specific situation, but the fact that all the big players get the same rates indicates RenTech isn't special in this way.
They have no size or leverage advantage that 200 other funds in the US don't have.
Not clear as we do not really know exactly how RenTech works. It is believed that there are substantial tax loopholes that were taken advantage of - which would go a long way (not all the way) to explaining the incredible performance of his fund.