Robert Mercer sure seems like a billionaire. He’s co-head of Renaissance Technologies, which runs a hedge fund that has created vast riches for two other owners. He bought a $90 million yacht and bankrolled the anti-establishment insurgency that carried Donald Trump to the White House. Newspapers and magazines have already taken to calling him a billionaire.
But in my job as a valuation manager for the Bloomberg Billionaires Index, I need better proof than that. So, as I did with Jamie Dimon and Lloyd Blankfein in 2015, I set out in search of facts that would show just how wealthy the secretive investor is. It would turn out to be one of the most challenging quests in my 14-year career valuing assets.
Mercer, 70, joined Renaissance in 1993 from IBM’s research center, where he worked on speech recognition. He became co-president in 2007. Like other partners in the firm -- including co-founder Jim Simons, Henry Laufer and co-President Peter Brown -- he has been a beneficiary of the legendary Medallion Fund, probably the world’s most successful hedge fund, which manages about $10 billion for Renaissance owners and employees.
Document Hunt
My search began, as it always does, with a hunt for documents. There were Securities and Exchange Commission and Department of Labor filings to go through, a 2014 Senate report, an employee lawsuit and other financial disclosures.
The first challenge was to find the fund’s historical returns. A 2012 Labor Department application requesting permission to have IRA assets invested in the fund disclosed returns for the 2000s. Figures for earlier and more recent years were provided to Bloomberg by investors or cited in other publications.
The results were astonishing: By my calculations, returns after fees have averaged about 40 percent since the fund started in 1988, and it hasn’t lost money since 1989. To put that in perspective: $1,000 invested in Medallion in 1988 would be worth more than $975,000 today after taxes.
But to determine how much money Mercer made, I would need to know a few more things: what Medallion’s assets were each year; how much of its profit was distributed; and what Mercer’s share of those payments was. That’s where things got difficult, because Renaissance is as secretive about its finances as it is about the algorithms that drive its investment strategies.
Medallion’s 2002 annual report disclosed assets for three years. It also showed returns and profits. And it revealed the fund capped its assets at about $5 billion. That meant that every six months any money in excess of the cap would be returned to investors. From the 2012 Labor Department document, I learned that all Medallion distributions were paid in cash. What I didn’t know was how the cap had shifted over the years to get to where it is today.
Mercer’s Share