David Rosenthal: belief

Transcript context

…And the pitch they’re making to the investor base is like, if you believe that we should be able to massively outperform the market doing quantitative trading, well we’re going to need a lot of fees to do that. So the investors basically took the deal if they thought about it enough. Okay, so that’s the fees. On the performance, that 20% or 25%, it’s just not actually that far above market, if it’s above market at all. What you’re seeing is a high fee, normal-ish performance fee fund at this point in time. High management fee, normal-ish carrier performance element. At the end of 1990, Simons is so jazzed about what’s going on that he tells Berlekamp, hey, you should move here to Long Island. Let’s recentralize everything here. I want to go all in on this. I think with some tweaks, we can be up 80% after fees next year. Berlekamp is a little more circumspect. (a) He wants to stay in Berkeley, he doesn’t have any desire to move to Long Island, and (b) I couldn’t tell how much of this is just, he’s a little more conservative than Jim, or how much of this actually might be his, hey, whole poker bet sizing thing. He turns to Jim and he says, well, if you’re so optimistic, why don’t you buy me out? So Jim does at 6X the basis that Berlekamp had paid Ax a year earlier. On the one hand, making a 6X in one year sounds great.…

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