James Harris Simons: Renaissance Technologies

For over two decades, Simons’ Renaissance Technologies’ hedge funds have employed complex mathematical models to analyze and execute trades: many of them automated. Renaissance employs computer-based models to predict price changes in easily-traded financial instruments. These models work by analyzing as much data as can be gathered, then searching for non-random movements to make predictions.

Renaissance employs several specialists from non-financial backgrounds, including mathematicians, physicists and statisticians. The company’s latest fund is the Renaissance Institutional Equities Fund (RIEF). RIEF has historically trailed the company’s better known Medallion fund, a separate fund that contains only the personal money of the firm’s executives.

‘It is startling to see such a highly successful mathematician achieve success in different field,’ says Edward Witten, a physics professor at the Institute for Advanced Study in Princeton, NJ. He is considered by many of his peers to be the most accomplished theoretical physicist alive… (Gregory Zuckerman, “Heard on the Street”, Wall Street Journal, July 1, 2005).

In 2006, the International Association of Financial Engineers named Simons the Financial Engineer of the Year. He was estimated to have earned approximately $2.8 billion in 2007, $1.7 billion in 2006 and $1.5 billion in 2005 which was the largest compensation among hedge fund managers that year.