Jim Simons, Renaissance Technologies And Medallion Fund

Very few hedge funds consistently outperform the broader stock indices in both bull markets and bear markets. One of the most exclusive hedge funds; Renaissance Technologies has had their best year for the legendary Medallion Fund so far.

Medallion Fund The fund is exclusive due to the fact that it is only open to current and former employees. The SEC filings indicates the number of participants. For a $10B fund it has less than 2,000 members.

The fund has higher fees; 5 and 44, compared to average hedge funds who typically charge 2 and 20 (2% management fees and 20% performance fees). The high hedge fund fees usually mean that an average investor after paying the fees; struggles to beat a simple index fund.

The entire firm is based purely on the basis of using analytics to find patterns in data. While Data Science is now a buzzword and every firm on the planet including hedge funds use data to find patters;  Jim Simons had the first mover advantage.

Renaissance Technologies

Simons inspired a revolution that has since swept the investing world. The signals used by Renaissance Technologies are mind boggling. It finds individual patterns in data and exploits each pattern just enough to turn a small profit.  Carrying out several such transactions at scale ensures that you generate a fortune by adding up all of those small profits.

Renaissance Technologies has employees from multiple disciplines such as string theory, astronomy, mathematics who all work on developing predictive patterns and identifying mis-priced assets. The book does not give the secret sauce but rather chronicles how they started with trading commodities and then finally entered equities.

The models initially were not functioning as expected and they were so close to pulling the plug before they had the breakthrough. Unlike High Frequency Trading; their average hold period is from a few days to few months.

Robert Mercer and Trump This was the most interesting piece of the book. It talks about Robert Mercer and his involvement with the firm. In the 2016 presidential race, Rebecca Mercer (the daughter of Robert Mercer) had backed Ted Cruz.

Jim Simons To say that Jim Simons is recluse would be an understatement. He and his employees avoid all industry conferences and media appearances. Iron clad non disclosures prevent most employees from talking about the firm or any of their work at Renaissance Technologies.

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