Mutiny Breaks Out Inside The World's Most Successful Hedge Fund Over Donald Trump

Tyler Durden's picture

Last August, we introduced readers to the hedge fund that we dubbed the "puppe master behind the US presidential election", which also happened to be the most successful hedge fund in history : Setauket-based Renaissance Technologies (a recent analysis by LCH found that Ray Dalio's Bridgewater, with $45 billion in absolute profits since inception, was the most successful but the ranking ignored Renaissance, which has return $10 billion more).

Formerly known best for making a staggering $55 billion since its founding, RenTec as it is better known in financial circles, also emerged as perfectly hedged when it comes to the outcome of the presidential election. On one hand, there was RenTec's chain-smoking billionaire founder (in 2015 alone he made $1.7 billion) Jim Simons, who had donated some $10 million to Hillary Clinton's campaign, second only to Saban Capital. In a June 2016 interview with CNBC, Jim Simons said that "if you compare the presidential candidates using the Sharpe ratio, presumptive GOP nominee Donald Trump is 'not a good investment.'"

Jim Simons

Meanwhile, Rentec's Co-CEO, billionaire Robert Mercer, emerged as the man who was pulling the string behind Donald Trump's entire campaign. As the WSJ reported at the time, Mercer has longstanding ties to both people elevated to top posts in the Trump campaign. He and his daughter, Rebekah, not only poured money into the Trump campaign, but had recommended both Breitbart News chairman Stephen Bannon (they had invested $10 million in Breitbart News) and Republican pollster Kellyanne Conway, who already worked for the campaign, to join the Trump team around the time it found itself in disarray with last summer's scandals involving Tim Manafort. (Trump returned the favor, in part, by pouring that campaign money back into a data-analytics firm co-owned by Rebekah, who was later named to Trump’s transition team executive committee.)

Robert Mercer

And just like that the man who Rentec's founder, Jim Simons, said "is not a good investment" because his "Sharpe ratio is terrible", had become the investment of RenTec's current CEO.

A few months later, the investment paid off; Simons was wrong but thanks to Mercer's "bet", Renaissance ultimately won.

Fast forward to today when one would think that as a result of this "perfect hedge", the finely-tuned money-making machine that is RenTec, would be sailing smoothly. However a fascinating new report by WSJ's Greg Zuckerman, reveals that nothing could be further from the truth.

As Forbes eloquently puts it, "in your average workplace in your average election year, the politics of the guys or gals running the place might be discussed privately among staff but likely wouldn’t result in a confrontation with the boss. What’s more, the mostly left-leaning employees at Renaissance have had a like-minded friend in chairman and founder Jim Simons, who has been a major donor to the Democratic Party and Hillary Clinton’s bid for the White House. But 2016 was not your average election year and Renaissance is not your average workplace. With the amount of money people are taking home, they literally have the ability to reshape America in whichever way they see fit. And for Renaissance partner and research scientist David Magerman, Mercer’s support for Trump’s anti-immigration policies and his associations with white-nationalist fellow travelers was too much to take."

A quick bit of background: Magerman makes millions each year, drives a Tesla and says he gives more than $10 million in charity annually. A research scientist, he is one of 100 partners at the firm, but he isn’t one of Renaissance’s most senior executives. Magerman, a 20-year Renaissance veteran who helped design the fund’s trading systems. He has concluded that every new piece of code he developed for Renaissance helped Mr. Mercer make more money and gave him greater ability to influence the country.

David Magerman

In recent months Magerman - a registered Democrat who calls himself a centrist, and who had complained to colleagues about Mercer’s role as a prominent booster of Donald Trump’s presidential campaign - started to become a more vocal at the office about his disdain for Mercer’s activities, which resulted in this awkward phone call with his boss, as reported by The Wall Street Journal:

Magerman says he was in his home office in suburban Philadelphia earlier this month when the phone rang. His boss, hedge-fund billionaire Robert Mercer, was on the line.

 

“I hear you’re going around saying I’m a white supremacist,” Mr. Mercer said. “That’s ridiculous.”

 

“Those weren’t my exact words,” Mr. Magerman said he told Mr. Mercer, stammering and then explaining his concerns about Mr. Trump’s policy positions, rhetoric and cabinet choices.

 

“If what you’re doing is harming the country then you have to stop.”

Following such a rather "uncomfortable" phone call with his billionaire boss, as well as the real possibility of getting fired, one would think the democrat would have prudently decided to keep his mouth shut. But Magerman did no such thing. In fact, he ramped up his efforts to show Mercer that he’s not going to stand by and let the politics of Breitbart News ruin the country. There were more phone calls:

Magerman says he first spoke with Mr. Mercer in January, when Mr. Magerman, who donates to local schools, called Mr. Mercer to ask for the opportunity to reach out to Rebekah Mercer to offer the administration help on education policy. During the call, they talked politics, disagreeing about some of the administration’s early steps. After airing his concerns with others at the company, Mr. Magerman received the second call from Mr. Mercer two weeks ago.

 

The conversation grew strained. After telling Mr. Mercer to stop harming the country, he said Mr. Mercer responded that his goal had been to defeat Mrs. Clinton and that he wouldn’t remain very involved in politics.

 

“How can you say you’re not involved?” Mr. Magerman said, citing an outside group Rebekah Mercer was involved in that was aimed at boosting Mr. Trump’s agenda.

Not content with keeping the matter internal, Magerman then broke the cardinal rule of hedge funds - and certainly the most secretive hedge funds in the world, one founded by a former codebreaker - he went public.

As the WSJ says "until now nobody within the tight-lipped hedge fund has gone public with a grievance." The changed when Magerman contacted Zuckerman to tell him that Mercer's “views show contempt for the social safety net that he doesn’t need, but many Americans do." Speaking to the WSJ reporter at the Dairy Café, a kosher restaurant he owns in Bala Cynwyd, Pa., Magerman said that “now he’s using the money I helped him make to implement his worldview” by supporting Mr. Trump and encouraging that “government be shrunk down to the size of a pinhead.”


David Magerman's home in Merion Station, Pa.

He has also tried to get to the source of his angst: those closest to Trump such as Jared Kushner:

To try to counteract his boss’s activities, Mr. Magerman says he has been in touch with local Democratic leaders and plans to make major contributions to the party. He says he called Planned Parenthood to offer his assistance and contacted Jared Kushner, Mr. Trump’s son-in-law and White House adviser, to voice his concerns about Ms. Conway and Mr. Bannon. He says he failed to reach Mr. Kushner.

Failing to generate traction, Magerman decided to use the nuclear route: use political connections to hurt his own employer:

Mr. Magerman has one idea that would reduce the power of people like Mr. Mercer. He said he was thinking about reaching out to Democratic Sen. Elizabeth Warren (D., Mass.) to craft proposals to reduce speculative trading, which presumably would curtail Renaissance’s profits.

Needless to say, such a dramatic attempt at corporate self-destruction would hardly be smiled upon by either by the republican Mercer, or RenTec's democratic founder, Jim Simons, who has invested his entire career into creating the world's most secretive, and successful, quant fund.

What happened next? Apparently, the self-loating employee thought that letting his conscience speak - quite publicly - would have no consequences.

In conversation at his cafe, Mr. Magerman said he hoped his public statements wouldn’t cost him his job. But if he does get fired, he said, he would have more time to devote to politics and other causes. “This is my life’s work—I ran a group that wrote the trading system they still use,” he said. “But I feel relieved I’m now doing something, and if they fire me, maybe it’s for the best.”

Unfortunately for Magerman and his idealistic universe, in the real world there are real consequences, and as the WSJ concludes:

On Thursday morning, after an online version of this story appeared, Mr. Magerman received a new phone call from Renaissance. A representative told Mr. Magerman that he was being suspended without pay and no longer could have contact with the company.

While we don't know if Magerman will be content with the status of his conscientious objector crusade against his employer, we are confident he will have much more free time to ruminate on the consequences of his actions. And, as he himself said, he will surely be relieved to no longer be with his loathsome ex-employer unless, of course, his entire story was just a hypocritical charade.

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turnball the banker's picture
turnball the banker (not verified) Feb 23, 2017 5:55 PM

Fuck hedge funds xnthos in 3 2 1

Handful of Dust's picture

"That's odd. I went into my office this morning and none of my passwords worked?"

 

~ Smegmaman

Croesus's picture

Oy Gevalt...Jew Vs. Jew...the last time that happened, 2 of them fought over a penny, And That, is how copper wire was invented.

Never One Roach's picture

Magerman was just trying to show off so he can get into Meryl Streep's boxer shorts.

Croesus's picture

@ NeverOneRoach:

Your post perfectly illustrates the old adage that money doesn't buy class, or good taste.

bigkahuna's picture

if Trump is making these "people" mad - he's doing the right thing.

The Management's picture

Trump splits the human pie along alpha/beta lines evenly. money or knowledge doesnt seem to affect which side people fall on.

Pinto Currency's picture

Any remotely observant person could see the Hillary Clinton was bent on destroying America primarily through war but also increasing already failed policies.

Magerman is behaving irrationally. Something else is frightening him.

Interesting to know what makes him so frightened.

kavlar's picture
kavlar (not verified) bamawatson Feb 23, 2017 8:34 PM

Ever wondered how Jews make up over 50% of billionaires? Wonder no more.

http://biblicisminstitute.wordpress.com/2015/07/28/how-the-ashkenazi-jew...

jcaz's picture

Flushed out another weak mind- this Trump divide is making being the boss pretty simple;

An incredible lack of critical thinking on Magermans's part-  geez dude, you can't even hedge yourself.....

Theosebes Goodfellow's picture

"...and thus the goose that laid the golden eggs was slaughtered."

Stupid fuckin' goose.

Manthong's picture

Trust in the Fed because you have no other real option.…

But pull your pinky finger out of the butt of the Black Swan that has been on your porch for the last several years.

land_of_the_few's picture

"What makes him so frightened"

bicycles

power or network outages

being mistaken for Seinfeld

deciding his true calling is open source programming and that he wants to grow a beard and hang out with Stallman and Torvalds and live on Cheetos and strong coffee

 

knukles's picture

If he wasn't going to be fired, now that he's hit the front page of The Hedge, he's history.
Just like Jamie Diamon criticizing Sandy Weil's daughter on the front page of the WSJ.
You don't "criticize" the boss.  And if you air your greviances, you do it in a private conversation with the boss.
Otherwise, shut the fuck up.  (Most people have no concept of simple civility anymore)

swamp's picture

Even went behind his back to defeat his speculation by approaching poke a haunt us.

NoDebt's picture

"Interesting to know what makes him so frightened"

I could answer that question in detail but the core of it is that libs actually believe all that BS that the MSM is spewing about the Russians, racism, sexism, etc.  And if the narrative on that changed tomorrow they would believe the new narrative without question, critical thought or benchmark against what came before.  Nor would they compare these things to either facts, data or even what they actually see going on around them.  There is good reason why many people (including myself) say that liberalism is literally a mental disorder.  When political beliefs so cloud your judgement you can no longer distinguish reality from hyperbole, what would you call it?

 

Sweet Chicken's picture

You know dude, I used to hear someone say "liberals have a mental disorder" and think that it was silly. Now? I totally believe it to be true but I also believe it to be true of all statists in general.

WaterWings's picture

Well said. They lie to themselves, and think everyone else does the same. Anyone with sincerity/integrity is prey. Evil does not even respect evil -- I imagine they see it as a dogpile being pushed into a meat grinder planning they think they escape. Apres moi, le deluge, is THEIR mentality.

Pinto Currency's picture

Unfortunate that the word 'liberal' is used to describe belief in statism and, at its extreme, totalitarianism.

There is indeed a religious component to their beliefs that does seem to obscure judgement.

Odd that Magerman, who by definition must be observant, could fall into that trap.

And his anxiety speaks volumes.

What's up Magerman? - everyone's really watching you closely now.

GoldLion's picture

Liberalism is not only a mental disorder, but liberalism is also a religion.

Memedada's picture

”Controlled opposition” – like you. There’s no big difference in the two ”tards” (libtards/trumptards). They just represent two different demographics that are manipulated in different ways. The end-result is the same (no matter if you were manipulated by Obama-hopium or Trump-hopium): the rich get richer (and more powerful and blatant in their power-frenzy – like starting to select their own for the theatre passing as democracy).

The whole deep state discussion is great. It is wonderful that people now start using the term – and by that recognizing that there is a power behind the official “democratic” power. Or in other words: you don’t have a government but a management-team selected by the same corporations that owns “your” country.

It is, however, clear that there’s still very little knowledge about what the deep state is. That depends on what team of corporate controlled opposition you’ve ended up in. Trumps is in general FIRE-deep state and that makes him at odds with the MIC-deep state (at the moment). On the other hand MIC-deep state was clearly Hitlery.

+ you know FOX is MSM too, right?

 

delacroix's picture

how much did he spend on pizza last year?

Yog Soggoth's picture

Yeah, I was thinking the same thing. Idealist turned extremist spends most of his life in the pursuit of money, and now does a 180 because he cares about the little folk so much, or maybe he is part of a group that could be procecuted during the Trump administration.

sonoftx's picture

I think you have something there Mr Mangement. I have been trying to figure out this guy at work. He is brilliant, he is very good at his job and he is paid very, very well. But, nothing that Trump says makes sense to him. It is almost as if he is from a different universe. We are about the same age so it is not generational. He is from roughly the same area of the country. He was raised comfortable but not c a silver spoon. His mom and dad were not divorced. In his profession he is very sure and precise. But, he does not want conflict. No, conflict. I think that he will likely avoid conflict even when a little conflict needs to occur. I think you are right. I think it may be the alpha/beta.
Thanks, something to ponder.

Liberty2012's picture

He's not avoiding conflict. He's avoiding reality.

He's attempting to maintain a contradictory worldview. Possibly because what he does for a living may not add much value to the world.

He is unwilling to look at life clearly, so he relies on platitudes.

He's finding his foundation to be quicksand.

Sweet Chicken's picture

Correct, that's why they get hostile. Because you are challenging the foundation of their beliefs. Cognitive dissonance is a bitch , bitchez. ;)

JohnnyHenricksen's picture

They suffer from "Normalcy Bias" and cannot fathom that their comfortable world view may crumble around them.  They're like the little kid that puts his fingers in his ears and screams so he can't hear what's being said.

ebworthen's picture

Hedge Fund = Satan Worshipers.

Which should lose their heads?  Well...all of them!

Is that a debate or something?  Is anyone confused?  Hang 'em high!!!

limited man's picture
limited man (not verified) ebworthen Feb 24, 2017 3:52 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

Richard Chesler's picture

A registered democrat that drives a Tesla and happily takes it up the ass.

Faggot!

Grave's picture

haha another assflake sore loser that cant take a "loss" like a man,
who doesnt know when to shut the fuck up and wait for the next election
if he is all butthurt about the recent one

nmewn's picture

"Speaking to the WSJ reporter at the Dairy Café, a kosher restaurant he owns in Bala Cynwyd, Pa., Magerman said that “now he’s using the money I helped him make to implement his worldview” by supporting Mr. Trump and encouraging that “government be shrunk down to the size of a pinhead.”


David Magerman's home in Merion Station, Pa.

...lol...nice house.

I wonder how many homeless vets or "undocumented illegal immigrants" he could get in there instead foisting them off on the public dime ;-)

swamp's picture

That house is cold and ostentatious. Nothing welcoming about it.

nmewn's picture

Quite so.

And to paraphrase our special snowflake friends "No one needs a house like that! There comes a time when you've made enough money!"

(Sigh)

So many false narratives and illusions to pop, so little time ;-)

Bingo Hammer's picture

eeeeuuuuwwwwww....that's some really smelly, sticky, pus-filled areas of politics you'd want to avoid for sure

lincolnsteffens's picture

I have to say that my ancestors were Jews and your comment was damned funny! Cracked me up.

Cruel Joke's picture

 

Roses are reddish, violets are bluish. If it wasn't for Jesus, we'd all be Jewish.

detached.amusement's picture

Christianity and Islam are proof that the jews hate goyim, otherwise y'all would be jews

markpower49's picture

The few decent J*ws all support Trump. Simons and Magerman are typical psychopaths from their (((tribe))).

jeff montanye's picture

it's just a guess but the reason simons and magerman support hillary is that they all are zionists, the former two jewish as well.  robert mercer is, based on his wiki entry and the daily stormer (which cares inordinately about such things), not jewish and perhaps not zionist either.

http://www.jpost.com/Jewish-World/Jewish-Features/The-worlds-50-Richest-...

http://www.dailystormer.com/third-biggest-donor-other-facebook-jew-pledg...

http://www.aish.com/authors/243940641.html

Dr Ongo's picture

"Luckily I got that backdoor"

Son of Captain Nemo's picture

"You're funny. You get a pass. Next time you're fired

Let's hope McCain won't get a pass

WikiLeaks: John McCain was begging Russia for Campaign Donations in 2008"

Yes ttb

It went something like this...

Give me $20 million for my campaign or I start escalation in "South Ossetia"!...

MFL5591's picture

iWho the hell cares what these two overpaid assholes are saying?

GUS100CORRINA's picture

This whole world is really in a bad place because of the perverted thinking of some of these people. DERIVATIVES comes to mind. 

They have sold their souls to the devil in many cases for MONEY and POWER.

It is OK to be successful, but not the way these guys are doing it. For example, using SHARP's RATIO to analyze President Trump completely and utterly misses the point. America is in a MORAL MESS and its young people are in rebellion.

In the end, professing to be wise they will all become fools.

jeff montanye's picture

trump would seem well evaluated by sharpe.

if the Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk, it would seem that hillary was bid up by the media to nearly the risk free rate yet her risk was significant: she was attempting to follow a two term democrat only middling popular and some of that based on a black face she couldn't match, she does not have the common touch, she was being investigated by the fbi, she was falling down a lot, and she had to cheat, and got caught at it, to beat a jewish socialist from vermont.

empanel the grand jury please.

swamp's picture

She never expected to win honestly.
She just didn't steal enough votes.

1980XLS's picture

Hedge Funds (and even Buffett sometimes)  lose money.

Ren-Tec never does.

Just sayin'