Medallion Fund? Red Flags

May 10 the Wall Street Journal, when reporting the obituary of James Simons, called Simons "one of the most successful investors in modern financial history".  To be fair, MANY other sources make the same claim. How does anyone know this?

The Journal continues to claim: 

"Between 1988 and 2018, Renaissance’s flagship Medallion Fund produced gains of more than $100 billion and average annual returns of 66% before the firm’s unusually hefty investor fees. The annual gains were 39% after those fees ... Medallion years ago became a fund only open to Simons and his colleagues."

These claims and almost ALL claims made about the Medallian Fund come from ONE source, The Man Who Solved the Market, by Gregory Zuckerman (2019) which has an appendix claiming to show a summary of Medallion's performance data. Zuckerman and every other claimant tell stories of the epic security and closely guarded secrets including "ironclad non disclosure agreements" of Medallian and its owner Renaissance Capital. 

This table, as presented in a paper by Cornell Capital Group is far from the standard disclosure required of a publicly offered futures account or mutual fund. This table would be rejected as insufficient and misleading. The requirements for a valid disclosure document are found here. 

The red flags here are too numerous to list. The major red flags are:

• opaque trading methodology
• no public track record
• too consistent extraordinarily high up years
• NO down years
• fund only open to insiders
• public funds offerred by parent firm Renaissance Technologies: the Renaissance Institutional Equities Fund and Renaissance Institutional Diversified Alpha funds were both subpar performers and no longer listed by my broker. 

The WSJ claim of  "a performance that topped those of Buffett, Soros, Peter Lynch and other investors" is laughable! These are true investor giants with public, audited track records and funds that made their investors millions!. There is NO SUCH PUBLIC TRACK RECORD with the Medallion fund. Pro-tip: Bogle may have the greatest record and legacy of all, permitting average investors to earn superior returns!

The only other performance tidbit from the Cornell Cap paper is the claim 

"According to Robert Mercer, one of Medallion’s key investment managers, Medallion was right on only about 50.75% of its trades.". 

How odd is that? Not very. According to Microsoft's stockhistory function, as of today (5/13/2024) the S&P 500 ETF, SPY, was up 4,204 days out of its 7,877 day trading history or a win percentage of 53.37%. 

While Madoff falsely tried to show his methodology, he TRIED. Perhaps Simon DID make these returns - to his credit, as far as I know, he never made public claims - but the inability to replicate these numbers in his public funds should give all of us pause. There's no fear of missing out with a story like this.