This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.
Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.
We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:
-
Shaming.
-
Attempting to 'build consensus' or enforce ideological conformity.
-
Making sweeping generalizations to vilify a group you dislike.
-
Recruiting for a cause.
-
Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.
In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:
-
Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.
-
Be as precise and charitable as you can. Don't paraphrase unflatteringly.
-
Don't imply that someone said something they did not say, even if you think it follows from what they said.
-
Write like everyone is reading and you want them to be included in the discussion.
On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.
Jump in the discussion.
No email address required.
Notes -
I’ve been thinking about where to post this because it only has some culture war connection.
Citadel posted +38% in their main hedge fund this year. They do better in Citadel securities which is HFT. This isn’t a huge finance sub. But in my opinion this is the greatest hedge fund performance I’ve ever seen. Their hedge fund business is what’s called a multi-manager with various pods getting capital allocated to them. Their sales pitch to investors is they average out all these managers (and fire losers quick who don’t make money) and run tight risks management. Other players in the space are Millenium, Balyasny, Schonfield, Point 72 (cohen Mets owner). These firms are suppose to never have down years. 6-10% after fee returns are fine because no down years. A big year I’ve seen before was high teens.
For non-finance people some firms do have higher return years. Old macro guys have had huge years. But they also take big concentrated bets and have big losses. Rentech has better returns but they’ve been capital constrained (past $4 billion not sure now) and closed to new investors for decades. Close to 40% return at large Aum (50 billion) and tight risks management seems very impressive.
Culture war wise Griffin moved firm HQ to Miami and is a big Desantis backer. And the Amc/Gme crowd calls him a market manipulator etc which I believe is false.
As you said, Renaissance Technologies is even better . I would always take hedge fund returns with a gain of salt ,especially if it's closed off to the public. Imagine if some of the biggest tech companies were private and rather than retaining shareholder wealth, paid huge dividends annually from profits to a small circle of insiders and employees. It would technically have among the highest returns ever. Its returns would look really good on paper, but that is what a private company is. It is not trying to make shareholders rich. It does not have to be investing related.
Now does Rentech make so much? who knows
I don’t think that is right.
Private companies are in fact trying to make shareholders rich. There are two ways of doing. Either distributing profits or selling shares. Corporate finance tells us that all things equal a company should distribute proceeds when the shareholder can get a larger return on the market compared to what the company can do with the cash. But of course all things are not equal.
In a private company, liquidity is constrained (ie I can’t sell a few shares today). So there could be a preference for dividends from a liquidity perspective.
In a public company, management often faces zero real oversight from shareholders. Management has an incentive to empire build even if that isn’t ideal for the shareholders. This is because paradoxically management has more invested in the company compared to shareholders. That is, management has spent years building networks within the company whereas shareholders probably own at least 30 other companies — shareholders are concerned with their portfolio’s return of which company X is but one factor. Shareholders might prefer each company taking on individually a bit more risk if it leads to a more efficient allocation of risk whereas corporate management wants the company to take on less risk. Therefore, if shareholders can’t restrain management, management may make suboptimal allocation of resources at the benefit of reducing risk at the company level.
Finally, you need to layer in taxes. There is a second layer of tax when PubCo distributes earnings. That isn’t the case for many private companies (often structured as pass throughs for US tax purposes). Therefore the calculus changes again. When I’m looking at a dividend from PubCo v. PrivateCo the first is going to be taxable while the second will generally be tax free. Therefore, there is often an incentive for me to want the PubCo to hold onto its money even if on a pre tax basis I can get higher returns outside the Pubco compared to what Pubco can obtain if I can’t get higher returns post tax.
The same is not true for private companies that are pass throughs. Not that suggests that pass throughs (ie private companies) are more efficient for shareholders and therefore more likely to make them rich.
This does gloss over different tax rates. Effective rate for most pass throughs of decent size is now 37% minus the 199A deduction whereas corporations are taxed at 21% and then when distributed the after tax returns are taxed at a 20% rate. So there can be timing benefits for corporations that aren’t there for pass throughs.
More options
Context Copy link
It’s not closed to public completely. $50 billion aum. Capacity constrained understandable. A lot of quit very profitable firms play that game (cit securities, jump, rentech, and a half dozen others).
He's not talking about Ren Tech, he's talking specifically about Ren Tech's medallion fund. It's only open to employees.
More options
Context Copy link
It is closed. impossible for outsiders to invest: only employees and some former employees and families can invest. if outsiders could invest it would be inundated with inflows and returns would likely be far worse.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link