Jim Simons
Jim Simons, who worked to crack Soviet codes during the Cold War, earned fame and fortune turning his math prowess to investments. Simons died Friday at 86, and leaves behind a towering legacy as one of the pioneers of computer-based quantitative investing.
He died in New York City and no cause of death was listed, according to his charitable organization, the Simons Foundation, which has given billions to philanthropic causes, particularly those supporting math, science research and education. He was known to be in poor health recently.
His methods helped inspire today’s welter of quant-oriented hedge funds, which many institutional investors have added to their portfolios over the last several decades.
Simons was worth $31.8 billion, making him the world’s 49th-wealthiest person, as listed on the Bloomberg Billionaires Index. In 1982, Simons founded quant trading house Renaissance Technologies (estimated assets now: $106 billion). RenTech, as it is known, does such things as assess the statistical probability of how far securities will move in a given market.
In 1988, Simons launched the firm’s flagship hedge fund, Medallion, which since inception has racked up a reported average net return of 39% annually. He feared Medallion would grow too large to be an effective investing platform, so he stopped accepting new money from clients in 1993. Then in 2005, he cashed out all outside investors, allowing only RenTech employees to invest.
He relinquished the RenTech CEO title in 2010 and stepped down as chairman in 2021. Simons turned over leadership of the company to two long-time staffers, fellow math whizzes Peter Brown and Robert Mercer.
Showing his math brilliance as a child, Simons went on to earn degrees from the Massachusetts Institute of Technology and the University of California, Berkeley. He worked at the Institute for Defense Analyses, a federally funded nonprofit, breaking Russian codes. But owing to his criticism of the Vietnam War, he ran afoul of the organization’s chief, General Maxwell Taylor, and got fired.
After a stint as head of the math department at Stony Brook University, Simons turned to Wall Street, where he used algorithms to trade commodities. From there, he founded RenTech, where instead of hiring finance experts, he preferred fellow mathematicians, as well as physicists and even astronomers.
“Hire the smartest people you possibly can,” Simons said at a talk he gave at MIT in 2019. “Work collaboratively, and let everyone know what everyone else is researching, so people aren’t wasting their time.”
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Tags: algorithms, Hedge Funds, James Simons, Medallion, MIT, quant trading, Renaissance Technologies