David Rosenthal: belief

Transcript context

…They gained confidence that they had enough profitable trades they could make, that they could raise the capacity without dampening returns. And perhaps they could have done it earlier and they just didn’t have the confidence that it would work at larger size, but I bet they’re very good at knowing how large can our strategy work up to before it starts having diminishing returns. Importantly, during periods of peak volatility, say 2020, Medallion continues to shoot the lights out. From at least the data that we were able to find on Medallion’s performance over the past few years, 2020, they were up 149% gross and 76% net. The magic is still there. One way to look at it, which may not be the be-all-and-end-all, but I think is a good way to compare Jim’s era at Medallion versus Peter and Bob’s era. During Jim’s tenure, Medallion’s total aggregate IRR from 1988 when the fund was formed to 2009 when he retired, was 63.5% gross annual returns and 40.1% net annual returns, which of course did include many periods of lower carry, 20% versus the 44%. During the post-Jim era, the Peter and Bob era from 2010 to 2022 was when we were able to get the latest data, IRRs are 77.3% gross and 40.3% net. Better on both fronts, even with much higher average fees. yeah, I think Medallion is doing fine. It’s amazing. And we weren’t able to tell. There are some sources that report that they’ve grown from $10 billion in the last few years to being comfortable at a $15 billion fund size. If so, that just means that they continue to find more profitable strategies within Medallion to keep those same unbelievable returns at larger sizes.…

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