It certainly appears that way. WSJ picks up on dissent among investors in Renaissance Technologies, a massive quantitative hedge fund run by the highly secretive geek James Simons. Observers have been wondering how Renaissance's in-house Medallion Fund has managed to continue to outperform the stock market handily while funds open to outside investors have performed miserably. Simons' outside investors funds were apparently obliterated in the massive short squeeze also known as the most recent bear market bounce.

Ever since the $50 billion Madoff Securities Ponzi scheme came to light, I have been wondering whether there are others out there that have yet to be discovered. While the facts of how Madoff was able to keep his scheme going remain elusive, it appears that a recent $7 billion cash call made it clear that he did not have enough cash on hand. If Madoff was indeed a Ponzi scheme, he would have needed to raise $7 billion from new investors to meet those redemption requests -- since he could not raise that much new money he folded his hand.

It is hard to believe that Madoff is the only scam artist out there. Why was Madoff able to pull it off for so long? Are there other funds with similar characteristics? Is James Simons' $35.4 billion (October 2007 assets under management) Renaissance Technologies such a fund? The answer to the last question is that it's possible but unlikely.

Since enough is not yet known about where Madoff's money came from and where it went, we don't know how he pulled it off. But, as I posted, there are four key elements that probably contributed:

• Unrealistically steady returns that others could not duplicate. Madoff reported 1% a month returns through a split conversion strategy that others could not duplicate but that investors wanted to believe was real;
• Lack of independent auditing. Madoff had a three-person audit firm -- one of whose members was a 78-year- old living in Florida;

Hedge funds have had a lousy year, losing an average of 10.8%. But two hedge funds -- big winners in 2007 -- kept making money this year as well. Meanwhile, those two winners mask an awful lot of losers who will probably find their way into oblivion.

The winners for 2008 (at least through September) are run by James Simons (a math genius whose money-making techniques elude explanation) and John Paulson (who made so much money last year shorting subprime). Here are the details:

• Medallion Fund, run by Simons' Renaissance Technologies LLC, has $8 billion in assets and gained more than 58% -- or $1.43 billion in profits; and
• Advantage Plus fund, Paulson's $13 billion investor in takeovers, restructurings and other corporate events, returned 24.6% through September.

Meanwhile, investors are scrambling for the exit for the typical hedge fund, withdrawing $87.5 billion. Total industry assets fell 11% from the peak of $1.93 trillion in the second quarter of 2008 to $1.72 trillion at the end of the third. Hedge fund closures by the middle of 2008 were 15% ahead of 2007. And that may be only the beginning for the world's 10,000 funds.

Isn't capitalism great?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

James Simons is the richest math teacher you've never heard of. Last year he earned $1.7 billion (a fact that was reported in the media in 2007) as head of Renaissance Technologies, a hedge fund compound from which he takes enormous fees.

How enormous? Simons earns 5% of assets under management and 44% of profits. Typical hedge funds managers earn 2% management fees and 20% of the profits. How does Simons justify the fees? He beats the competition regularly. In 2006, his $6 billion Medallion fund posted gross returns of 84%; 44% after fees.

Simons's annual pay checks have been adding up nicely for him. His net worth was recently estimated at $5.5 billion. Not bad for a math teacher.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.

Be sure to check out more Money Winners of 2007.