Jim Simmons, the mathematician and investor whose secretive company Renaissance Technologies built what many in the financial world consider the world’s greatest money-making machine, has died. He was 86 years old.
He died Friday in New York City, his charitable foundation said, but did not give a cause of death.
Simons, who transitioned from academia to investing in his 40s, eschewed the standard methods of wealth managers in favor of quantitative analysis, which finds patterns in data that predict price movements. His technique was so successful that he became known as the Quant King.
At Renaissance, located in quiet East Setauket, New York, about 90 miles east of Manhattan, Mr. Simmons avoided hiring Wall Street veterans. Instead, he seeks out mathematicians and scientists, including astrophysicists and codebreakers, who sift through the terabytes of data his company inhales every day, from sunspots to overseas weather, to find useful investment information. It was given to me.
For more than 30 years, his profits have declined even as computer performance has gotten cheaper and competitors have tried their best to imitate Renaissance success by building their own complex algorithms for managing funds. Consistently outperformed the market.
Theodore Aronson, founder of quantitative asset management firm AJO Vista, told Bloomberg Markets magazine in 2008, “There are only a few people who have truly changed the way we look at markets. John Maynard Keynes is one of those few.” ” he said. Warren Buffett is one of those few. So is Jim Simmons. ”Play video
Simmons, a former U.S. government code breaker, declines to provide details about how his most famous fund, Medallion, generated returns more than four times greater than the S&P 500 index. did. From 1988 until his 2023, the fund delivered an astonishing average annual return of nearly 40% despite paying high fees, making Simons and as many as three of his colleagues millionaires. .
He is worth an estimated $31.8 billion, making him the 49th richest person in the world, according to the Bloomberg Billionaires Index.
Customers and insiders paid large sums of money to entrust Simons with their funds. Ultimately, he raised fees to 5% of assets and 44% of profits, the highest in the industry. He quickly began restricting access to the fund, believing that if Medallion grew too large, the algorithms the company used to trade stocks, bonds and commodities would break down.
In 1993, Mr. Simmons stopped accepting new funds from Medallion’s customers, and in 2005 he completely excluded outsiders, allowing only employees to invest. He returned profits annually and capped the fund’s size at about $10 billion.
He opened more pedestrian funds for the public. At times, the difference in their performance was dramatic. In 2020, Medallion funds rose 76%, while public funds posted double-digit losses.
Company trip
Simmons’ talent extended to knowing how to inspire the eccentric employees (300 in all) who came to Renaissance. The complex problem of figuring out why markets rise and fall was one of his attractions, as was the high pay and the sense of community he created.
“It’s an open atmosphere,” Simmons said in a rare speech at his alma mater, the Massachusetts Institute of Technology, in 2010. “We make sure everyone knows what everyone else is doing. The sooner the better. That’s what inspires people.”
He acted as a benevolent father figure, organizing company trips to Bermuda, the Dominican Republic, Florida and Vermont, and encouraging employees to bring their families.
Company lore has it that Simons, a lifelong smoker, took out local restaurant insurance on company ski trips so he wouldn’t have to part with the benefits he loved.
Many competitors have tried to recreate Medallion Fund’s secret sauce, but have failed. After Bernard Madoff’s money-making success was exposed as a Ponzi scheme in 2008, the Securities and Exchange Commission called for a renaissance, Simons said at another MIT gathering in 2019.
“They certainly studied us,” he said. “Of course we couldn’t find anything.”
political divide
Mr. Simmons retired as CEO in 2010 and as chairman in 2021. Two key early hires were Peter Brown and Robert Mercer, mathematicians and pioneers in speech recognition and machine translation, drawn from IBM’s famous Thomas J. Watson Research Center. — replaced him as co-CEO.
“Professionally, Jim was a mathematician and a businessman. Spiritually, he was a visionary. Personally, he was a mensch who cared deeply for individuals and humanity. ” Brown said in a memo to Renaissance employees Friday.
Renaissance’s ability to make money made it a honeypot for politicians of both major political parties.
Simons and his wife, Marilyn, have been major donors to the Democratic Party since 2015, giving more than $109 million to candidates and endorsement committees, including Hillary Clinton and Joe Biden, according to OpenSecret. was.
One of Simons’ first hires, fellow billionaire Henry Laufer, also became a major supporter of the Democratic committee and the cause. But Mercer, along with his daughter Rebecca, became major contributors to the Republican Party, particularly to Donald Trump in 2016.
Around 2020, Renaissance expanded the group of directors overseeing the company to replace Mr. Simons, promoting his son Nathaniel Simmons to co-chairman, which he will eventually take over.
master of mathematics
James Harris Simmons was born April 25, 1938, in Brookline, a suburb of Boston, the only child of Matthew Simmons and the former Marcia Cantor. His father worked in the film industry as a New England sales representative for 20th Century Fox. After that, I helped his father-in-law run a shoe factory.
Simons, who had been good at math since the age of three, graduated from Newton High School in three years. He became bar mitzvah at age 13, but says he had little interest in Judaism after that.
At MIT, he earned a bachelor’s degree in mathematics in 1958 after just three years of study. While pursuing his Ph.D. at the University of California, Berkeley, he got his first taste of investing by driving to Merrill Lynch Securities in San Francisco to trade soybean futures. He was also married to his first wife, the former Barbara Bluestein, with whom he had three children, Nathaniel, Liz, and Paul, who died in a bicycle accident in 1996.
That marriage ended in divorce. With his second wife, the former Marilyn Hollys, he had two children, Nick and Audrey, who died in a swimming accident in 2003. He is also survived by five grandchildren and one great-grandchild.
Feeling that his future path was set, Simons returned to MIT in 1961 to take up a teaching position. “I remember sitting in the library one day and saying, ‘Well, I guess I’ll be an assistant professor, then an associate professor, then a professor, and then I’ll live my life and die. ” she recalled in a 2020 oral history interview with the American Institute of Physics. “And it made me think there might be something else out there.”
Breaking codes during the Cold War
In 1964, after teaching at Harvard University, Simmons moved to Princeton, New Jersey, and took a high-paying, highly classified job at the Institute for Defense Analyses. This nonprofit research organization employed mathematicians to assist the U.S. National Security Agency in breaking codes and codes used by the Soviet Union.
This research introduced Simons to the possibilities of creating computer algorithms. IDA employees are allowed to spend half their time on personal work, and Mr. Simons devoted some of that time to predicting short-term stock market movements.
Mr. Simons worked there for more than three years until he lost his job after publicly challenging IDA President General Maxwell D. Taylor over the Vietnam War.
Writing in The New York Times Magazine, Taylor argued that the United States was winning wars worth fighting. In a letter to the editor, Simons wrote, “Any political gain from military victory cannot be offset by the enormous economic, intellectual, and moral investment we continue to make in this enterprise.” He elaborated on his belief that “no.”
Simmons was hired as chair of the mathematics department at the State University of New York at Stony Brook. He created the Chern-Simons theory with Shain Shen Chern and published it in a 1974 paper. This theory provides tools known as invariants that mathematicians use to distinguish between the types of distortions in a particular curved space, that is, normal space that exists according to Albert Einstein’s theory of general relativity. .
In 1976, he received the Oswald Veblen Geometry Prize from the Mathematical Society of America.
trading products
Simons served as head of the mathematics department and, using the contacts he had gained from his work in cryptography, returned to trading.
Initially, he bought and sold goods based on fundamentals such as supply and demand. He found this experience heartbreaking, so he asked a network of cryptographers and mathematicians to help him examine the pattern. former IDA colleagues Erwin Berlekamp and Leonard Bohm, and mathematicians Laufer and James Ax, whom he personally scouted for retirement. He will attend Cornell University and join the Stony Brook faculty.
“There may have been some way to statistically predict the price,” Simmons said in a 2015 interview with Numberphile. “We gradually built the model.”
In 1978 he left academia for good to try his hand at money management.
He founded Manemetrics, a predecessor to Renaissance, in Setauket, just east of Stony Brook. He consulted his old friend and fellow IDA codebreaker Leonard Bohm. He says his mathematical model could be used in currency trading. He brought in Ax, a former Stony Brook colleague, to oversee Baum’s work.
Ax concluded that the model works not only for the currency created by Baum, but also for any commodity futures. Simmons founded his Ax using his own trading account, his Axcom Ltd, and eventually his Medallion was born.
Medallion’s first two years were rocky, but after focusing solely on short-term trading in 1990, Medallion returned 56% net of fees, and its performance never slowed down.
Simmons once said of his transition from science to finance: The appeal, of course, is that you can make more money successfully predicting stocks than predicting comets. ”
Simons has pledged to donate the majority of his fortune to charity. The New York-based Simmons Foundation was founded with Marilyn in 1994 and supports research in mathematics, science, and autism. Simons also founded Math for America, which extends fellowships to math and science teachers in New York City public schools. Last year, he donated his $500 million to Stony Brook University’s endowment. This is his one of the largest donations to higher education in U.S. history.
“Jim had three quite remarkable careers: as a mathematician, as a pioneer of quantitative methods in trading, and as a philanthropist,” said Simons’ student and Silver Professor of Mathematics at New York University’s Courant Institute. said Jeff Cheeger. “He was one of the great men of our time.”