Pioneering Fund Stages Second Act

The founder of Renaissance Technologies LLC, one of the most successful hedge-fund companies ever, is trying to pull off a feat few other investment impresarios have managed: passing the torch.

James Simons, the secretive mathematician and Cold War code breaker who founded the firm in 1982, stepped down as chief executive in January. A pioneer in utilizing powerful computers to comb markets for trading opportunities, Mr. Simons has long received credit for the firm's hefty returns.

Now Peter Brown and Bob Mercer, two lieutenants of Mr. Simons all but unknown to the investing world, must steer the firm through challenging waters. The firm's main funds open to outside investors have posted mediocre results, and Messrs. Brown and Mercer, who are co-CEOs, say they are mulling whether to shut them down.

Mr. Simons made his reputation on his signature fund, called Medallion, which has posted average returns of about 45% a year, after fees, since its inception in 1988. Since 1995, it has had only one money-losing quarter, slipping 0.5% in the first quarter of 1999, according to documents reviewed by The Wall Street Journal. Medallion's returns have outpaced those of Warren Buffett, whose Berkshire Hathaway Inc. has gained roughly 20% a year since Mr. Buffett took over in 1965.

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Million-Dollar Man March

Humor~~

Demanding further intervention from the Federal Reserve to protect their endangered fortunes, thousands of the nation’s leading hedge-fund managers marched on Washington today.

Dubbed “The Million Mercedes March,” the protest was said to be the largest chauffeur-driven demonstration in the capital’s history.

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Get Off the Ledge

Unless you're in a highly leveraged hedge fund or running an investment bank, you have no reason to despair the turmoil on Wall Street.

Mortgage lenders are dropping like flies. Hedge funds are blowing up. Central banks are injecting money into financial markets to prevent a meltdown. Little wonder that many investors are fighting the urge to panic.

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Your Hedge Fund Questions, Answered

One thing that surprised me, however, is that nobody asked Barsky, a former Wall Street Journal reporter, what he thinks about Rupert Murdoch’s purchase of the Journal (and the rest of Dow Jones). This is probably a good indicator that journalists care a lot about the business of journalism — look at the thousands of column inches the Times and the Journal itself have devoted to the deal — but that nobody else really does.

Anyway, since I cared, I asked Barsky, and you’ll find his reply at the end of this hedge-fund Q&A.
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Hedge Funds Pluck Money From Air in $19 Billion Weather Gamble

This might be a sign of too many hedge funds chasing for too few opportunities. Maybe Berkshire should be in the game too.

Credit Suisse Group trader Patrick Ayash rarely reads earnings estimates and just skims news about inflation. One thing he never misses: the daily weather report.

Ayash, 31, is part of an army of mathematicians, hedge-fund whizzes and programmers pouring into the $19 billion market for weather futures, financial instruments tied to everything from storms over Kansas, an early frost in the Netherlands, or a frigid spring in New York.

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Grantham Says Hedge Funds, LBO Funds to Collapse

Generally I agree with Mr. Grantham's take, but how will the whole thing play out? Nobody knows...

Jeremy Grantham, the money manager who oversees $150 billion as chairman of Grantham, Mayo, Van Otterloo & Co. LLC, said credit-market declines may force as many as half of all hedge funds to close in the next five years.

The loss of investors' appetite for risk also may cause at least one global bank and ``one or two'' of the largest private- equity firms to go out of business, Grantham, known for his pessimistic outlook, said yesterday. The 68-year-old investor said he's still bullish on emerging-markets stocks. Read More

The King of Hedge Fund Alley

Who do the new Masters of the Universe write their rent checks to? Chances are, it's to New York real estate developer Harry Macklowe.

Not so long ago, Harry Macklowe was perhaps best known for his long-running feud with billionaire homemaker Martha Stewart.

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