The RenTech model
Prime Future 199: the newsletter for innovators in livestock, meat, and dairy
People have been asking how to subscribe multiple readers from the same company at a discounted group rate. You can do exactly that using this link.
I recently listened to a deep dive on the investment firm Renaissance Technology, aka RenTech.
"The firm uses quantitative trading, where staff tap data in its petabyte-scale data warehouse to assess statistical probabilities for the direction of securities prices in any given market. Staff attribute the breadth of data on events peripheral to financial and economic phenomena that Renaissance takes into account, and the firm's ability to manipulate large amounts of data by deploying scalable technological architectures for computation and execution.
Renaissance Technologies' hedge fund has employed mathematical models to analyze and execute trades, many of them automated. The firm uses computer-based models to predict price changes in easily traded financial instruments. These models analyze as much data as possible, then look for non-random movements to make predictions.”
While quantitative trading is not novel in 2024, it was revolutionary when RenTech first started in the 1980s.
In fact, Renaissance Technology may well have invented machine learning, but it can't really be proven because, instead of licensing their proprietary technology, they kept their capabilities to themselves and used it as their competitive advantage to make money. A lot of money.
"Since 1988, RenTech's flagship Medallion fund has generated average annual returns of 66% before charging hefty investor fees—39% after fees—racking up trading gains of more than $100 billion. No one in the investment world comes close. Warren Buffett, George Soros, Peter Lynch, Steve Cohen, and Ray Dalio all fall short."
— ‘The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution’ by Gregory Zuckerman 2019
Renaissance Technology is a business that could easily have become a technology company licensing data and algorithms to other traders.
They could have made a lot of money selling proprietary data sets.
They could have made a lot of money selling analytics tools and algorithms.
Instead, they are an investment firm powered by proprietary data and analytics technology.
Let’s call this the RenTech model.
This brings us squarely to the business of livestock, meat & dairy.
Today, we look at why the best data players in agriculture might be the ones implementing the RenTech model in their own animal protein category, and what it takes to pursue this path.