Last Updated on 25 July, 2021 by Samuelsson
Jim Simons, born in 1938 and despite his young and good looks has been chain-smoking for decades, recently stepped back as Chairman of the management group.
Jim Simons is the founder and main force behind Rennaissance Technologies, the asset manager that manages the best fund of all time: The Medallion Fund. James Simons is, according to Wikipedia, the 66th richest man in the world. What is more amazing is that James Simons has accomplished to generate his wealth with much less compounding than for example the more famous investor Warren Buffett.
How has Jim Simons and the Medallion Fund managed such a return?
While Buffett can let his wealth grow by the magic of compounding, Jim Simons has not had that opportunity. While Buffett has presumably compounded at 19% annually, Jim Simons’ Medallion Fund has averaged 66% annually from 1988 to 2018. This means a 100 000 investment in 1988 would be worth 4 010 907 000 000 today! Obviously, no fund manager can manage such an amount without moving the markets. Thus, a lot of the capital has been handed back to the owners over the years.
How did James Simons keep the trading algorithms a secret?
How Jim Simons’ trading strategies made 66% a year has been covered at Quantified Strategies. It’s an interesting read, and additionally, the linked article contains some very interesting comments from the recent book about Jim Simons written by Gregory Zuckerman.
What kind of trading strategies have they employed?
It is standard in the industry to sign a non-compete contract. Renaissance has a 5 year non-compete, and they will and have sued other companies that employed their former employees. Millennium had to pay $20 million when some employees joined from Rentech.