Thursday, April 12, 2007

Top traders in 2006

Trader Monthly magazine has come out with its list of top traders for 2006. To make the top 5, you need to have made 1 billion. To make the top 100, only 50 large ones...

Buggers seem to have lost my application form which I had filled out in triplicate and got attested by a notary!




Est. Income
John Arnold

Centaurus Energy


James Simons

Renaissance Technologies Corp.


Eddie Lampert

ESL Investments


T. Boone Pickens

BP Capital


Stevie Cohen

SAC Capital Advisors


Stephen Feinberg

Cerberus Capital


Paul Tudor Jones

Tudor Investment Corp.


Bruce Kovner

Caxton Associates


Israel Englander

Millennium Management


David Shaw

D.E. Shaw & Co.



Full details here.
via Rajagopal

Interestingly, #2 in 2006 - James Simons - was #1 in 2005, earning around the same $1.5 billion range. He is a mathematician who is co-credited with the Chern-Simons theory. Read more about Simons here.

Simons runs "Renaissance Technologies" (RenTec) which specializes in black-box program trading. This is a trading technique which uses computer programs to automatically buy and sell equities/bonds/options and other instruments based on a variety of models. RenTec is said to specialise in statistical arbitrage (stat arb). A more illustrative and easier description of stat arb can be digested on Roger Ehrenberg's blog where he explains stat arb opportunities in the Dow's 540 point drop in Feb of this year.

RenTec is rumored to run 2 varieties of these programs - (1) where the program automatically does the full trading and (2) where the program spits out potential trades to a "human trading desk" who then optimize the recommendations for best leverage. Because the fully automated programs leverage stat arb models, they generate an enormous volume of trades squeezing tiny profits in each transaction. In the past, RenTec programs have generated 10% of total daily volume on the NASDAQ.

RenTec has around 250 employees, most of whom are Ph.D's in Mathematics, Physics, Comp Sci etc. and have never worked on Wall Street. From some info I had read sometime back, only the head of their "human trading desk" is from Wall Street.

If anybody wants to share in that wealth, you can apply here. Don't forget to give my name as the referral if you get in so that I can collect the 10k referral fee etc etc.

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