Book Review

How did RenTech do it? – Book Notes of “The Man Who Solved the Market”

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Jim Simons’ shop Renaissance Technology, or as insiders call it “RenTech”, is the hallmark of quant fund managers. I’ve been longing to learn about how they achieved it and can’t wait to read this Greg Zukerman’s new book on Jim Simons.

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As usual, I tried to put some lessons/thoughts useful for myself, hopefully for my readers as well.

[Bonus] I also dug up some RenTech job descriptions that no one ever (at least I didn’t see) found regarding what type of talents RenTech has been hiring (thus what type of new techniques they may be using) more recently. Go straight to the last point if that is your only interest.

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Book Notes – Big Money Thinks Small (by Joel Tillinghast)

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Joel Tillinghast is a tenured Fidelity portfolio manager for its Low-Priced fund, however his name was known by few, including me, until recently. Tillinghast recently published his first book – Big Money Thinks Small last month, and was featured in a Barron’s interview in 08/12/2017 (Link here). When I first saw his interview, I found this manager interesting for his ability to consistently beat his benchmark, Russell 2000, for years with 100+ holdings. This diversified approach is very different than the “traditional” school of value investing, who advocates concentrated bets. Another impressive trait of Tillinghast’s fund is the extreme low turnover – only 9% a year. This means he on average holds each position for over 10 years!

For the sake of these special traits, I decide to pick up his book and try to see if there is anything I could learn from him.

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Overall, I think it is a valuable book, especially for someone had some investing experiences and is eager for historical investing case studies. Here are my key thoughts/lessons:

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All About Moats – Book Notes of Pat Dorsey’s Two Books

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If you haven’t heard of Pat Dorsey, here is a quick intro for you: He started his career at Morningstar as a sell side analyst, moved up to the head of the reach team in a few year and stayed there for about a decade. After leaving Morningstar, he started his own firm Dorsey Asset Management in 2014. Although his track record as a fund manager is yet to be tested, I found his books very insightful, especially for firm’s economic moat/competitiveness study.

 

Dorsey is the author of below two books:

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Howard Marks and his Buddhism-based Investment Philosophy – Book Note of [The Most Important Thing]

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I always liked Howard Marks’ famous memo and his thoughts in various interviews, but only got chance recently to read his book [The Most Important Thing – Uncommon Sense for the Thoughtful Investor].

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Below are some topics that are most insightful for me.

– Oriental philosophy on cyclicality

Within this book, as well in Marks’ past interviews, pendulum, which continuously swings from one end back to the other, was mentioned many times as a metaphor to illustrate his view of world, markets and human sentiments. Marks also revealed his spiritual root for such a philosophy, dating back to his Wharton days when he picked up Japanese Studies as the obligatory non-business major and learned Mujo (無常, a Buddhism doctrine means “Impermanence”). Not only Marks credited his Japanese Study by claiming “they contributed to my investment philosophy in a major way”, I believe he also passed along such philosophy to his decedents, as indicated by his son Andrew Marks’ plan to name his new money managing business after “Anicca”, which is Impermanence in Pali, the “native” language of Buddhism.

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Book Notes – So You Want to Start a Hedge Fund

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I know it sounds like a cheesy book name, but like Joel Greenbaltt‘s classic “You Can Be a Stock Market Genius“, this is another great book with cheesy name. The author Ted Seides is one of David Swensen‘s proteges, having worked on both asset owner and money manager sides. Therefore, this book offers unique perspectives (from both capital allocator and money manager angles) on how to build a great money managing business. Lastly, although the book name may be alluding to step by step how-to guidance on starting a hedge, it doesn’t have anything like that. Rather it is fully loaded with real cases, about how start up funds succeeded or failed,  which are invaluable lessons for anyone considering starting their own money managing businesses.

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I think I probably read this book too early as it could serve these readers with more experiences and are closer to the point of setting up their own funds. Nonetheless, following are the lessons I found most valuable to me. They either significantly changed my existing views or offered brand new insights to me. Continue reading →