No I think the magic is in the signal detection. Basically, there is only so much alpha in the market. RenTech gets to the signal first and exploits it before everyone else. Thats what makes this so hard. If they all know the same math to figure out where the current signals are, its about who is willing to take the risk of getting into the position before its clear its really a signal.
I used to work on investing using credit card data (which rentech uses). All the hedge funds can access the daily credit card data at the same time. The question is, where there is a huge amount of noise in some pattern in the data, the risk is still high entering a position on it. The fund that models that risk best and says, "when the unique number of credit card spenders at this company goes up, I buy", they make the most.
I think we are saying the same thing, but I am just elaborating on what "signal detection" means. The usual approaches at worst just don't work, and at best don't scale very well.
I am saying that (I believe) RenTech has taken a very holistic approach to signal detection and maintenance, rather than the very academic approach that used to be the norm. And even if a signal is found, they have to be weaved into the trading system gradually, and eventually removed when they no longer work. This is a very challenging problem and they are very good at it.
I used to work on investing using credit card data (which rentech uses). All the hedge funds can access the daily credit card data at the same time. The question is, where there is a huge amount of noise in some pattern in the data, the risk is still high entering a position on it. The fund that models that risk best and says, "when the unique number of credit card spenders at this company goes up, I buy", they make the most.