Author: Dolly

Quant pioneer Renaissance Technologies LLC sent clients an analysis of its performance and a rationalization of recent deep losses, an unusual move for one of Wall Street’s most secretive firms.

In the letter sent late Friday, the firm said losses of between 20% and 30% in 2020 for its three funds open to outside investors should have been expected at some point during the course of the funds’ histories. The letter partly blamed heightened volatility for the weak performance.

Still, some clients said the letter was short on meaningful explanations.

The decision to reach out to investors with a letter follows an awful year for several of Renaissance’s hedge funds, with some clients having expressed unhappiness in recent days. The weak performance of some of the firm’s outside funds has spurred investor withdrawals. Renaissance manages nearly $60 billion firmwide, down from about $75 billion a year ago.

“Although recent performance has been terrible and worse than prior performance would have suggested was likely for 2020,” the letter says, “in track records as long as ours, some risk-return ratios every bit as bad as the ones we are now seeing are not shocking.”

It’s been a wild year for commodity markets, marked by despair last spring as the world ground to a halt and followed more recently by exuberance. Nowhere has the bullish feeling been more evident than the usually staid market for liquefied natural gas: February futures for Asian gas hit nearly $20 per million British thermal units last week according to data from Refinitiv. As recently as mid-December, they were only trading around $8 per MMBtu.

Unfortunately for gas producers, today’s prices aren’t sustainable and the longer-term supply picture is bearish. Supply stoppages combined with the coldest winter in Asia in decades are a perfect market for those gas producers who still have capacity to supply spot shipments—including U.S. firms like Cheniere. But futures are already pricing in warmer weather a few months out: the April contract is currently trading around $7 per MMBtu.

Further out, Chinese demand is still the swing factor—as it is for most industrial commodities. Here the news is bullish, but perhaps less so than some LNG vendors might hope. Chinese demand continues to expand robustly, and China continues to consume far more gas than it produces. The bad news is that the growth of

American consumers have been forced to eat food-delivery costs sometimes nearly as big as the meals themselves. Regulators are fed up.

In addition to new laws boosting compensation and benefits for delivery drivers, restaurant protections such as pandemic-related commission caps have been proliferating at the city and state levels. Consumer protections could be next.

New laws have been costly for delivery players that have been struggling to generate consistent profits lately. On its third-quarter conference call, Uber , which owns and operates Uber Eats, suggested it wouldn’t absorb all of the added costs related to the passage of Proposition 22 in California. Instead, Chief Financial Officer Nelson Chai said he expected additional wage or benefit costs to be passed along to customers. DoorDash and Grubhub say they are doing the same.

When the state’s voters opted to keep drivers classified as independent contractors, they didn’t necessarily realize they would be picking up the tab for the added benefits drivers got as part of the deal. Yet, on Uber Eats orders in California as of Dec. 14, for example, consumers’ itemized receipts include a “Driver Benefits” fee, which is explained in the app as a direct consequence of Proposition 22.