Like PatientCheetah sayed "more money than god" has some insights. They also mentioned in the Keynotes that "Henry Laufer", with his studies of short-term patterns, contributed most to the success of Medallion. And "Robert Frey" sayed that the pattern recognition hasn´t anything to do with reversion-to-the-mean or trendfollowing, instead that there would be reactions to shocks which cause numerous market movements, which they seem to exploit in some way.
Edit: In 2007/2008 the returns where pretty high so there might be some truth to the statement.