I have a few friends who worked at RenTech, and the one thing that bothers me is the secrecy. It's the one company I know of outside of security-clearance jobs where you're not allowed to say that you worked there. I feel like that probably makes it harder for people to resume their careers if they leave. I've heard that there's PhD bigotry there, too, and that's it's nearly impossible to get in if you don't have a PhD; but I don't know enough to confirm or deny that. It could be completely untrue, or it could just be that most people who make the cut and know about RenTech happen to have PhDs.
He sounds like a stand-up guy, though, and compared to the ethical dirt on an average Silicon Valley CEO, this stuff which isn't even ethical dirt so much as practical disagreement is negligible. The restrictions seem mostly about preventing people from making their history trivially searchable by the uninitiated.
I would expect there to be something similar for these people? Just say "I was in Suffolk County" or whatever. JumpCrisscross on July 8, It is not impossible to get a RenTech job offer without a PhD.
Yes, they will batter you down during interviews if you don't have one. Taking a job at Renaissance Technologies is a commitment, on both sides. The culture of secrecy and non-competes is designed to filter away, even before the interview, candidates a unsure about their willingness to commit and b looking for a short-term career booster. The culture of secrecy and non-competes is designed to filter away, even before the interview, candidates a unsure about their willingness to commit What are the benefits of working at RenTech?
They seem to be asking candidates to take a huge risk to their careers, due to the legally-mandated secrecy. That suggests there's a proportionally huge payoff in working there. What is it? Apart from the great pay you get to invest in RenTech funds. I might be wrong but I think at this point theyre just working to manage their own money and not taking any money from investors.
Above all else - working with smart people is its own reward. It's hard to believe that a career at a secretive hedge fund that invests its own funds would provide much along that axis of career satisfaction.Renaissance Technologies LLCalso known as RenTech  or RenTec is an American hedge fund based in East Setauket, New York on Long Islandwhich specializes in systematic trading using quantitative models derived from mathematical and statistical analyses.
The firm is regarded as one of the "most secretive and successful" hedge funds in the world. Renaissance was founded in by James Simonsan award-winning mathematician and former Cold War code breaker. Inthe firm established its most profitable portfoliothe Medallion Fund, which used an improved and expanded form of Leonard Baum 's mathematical modelsimproved by algebraist James Axto explore correlations from which they could profit.
Jim Berlekamp was instrumental in evolving trading to shorter-dated, pure systems driven decision-making. Renaissance's flagship Medallion fund, which is run mostly for fund employees,  is famed for the best track record on Wall Street, returning more than 66 percent annualized before fees and 39 percent after fees over a year span from to Simons ran Renaissance until his retirement in late Both of them were computer scientists specializing in computational linguistics who joined Renaissance in from IBM Research.
Simons in was a recipient of the Oswald Veblen Prize of the American Mathematical Society, which is geometry's highest honor. The firm uses quantitative tradingwhere staff tap data in its petabyte -scale data warehouse to assess statistical probabilities for the direction of securities prices in any given market.
Staff attribute the breadth of data on events peripheral to financial and economic phenomena that Renaissance takes into account, and the firm's ability to manipulate large amounts of data by deploying scalable technological architectures for computation and execution.
For more than twenty years, the firm's Renaissance Technologies hedge fundwhich trades in markets around the world, has employed complex mathematical models to analyze and execute trades, many of them automated. The firm uses computer-based models to predict price changes in easily traded financial instruments.
These models are based on analyzing as much data as can be gathered, then looking for non-random movements to make predictions.
Some also attribute the firm's performance to employing financial signal processing techniques such as pattern recognition. The book The Quants describes the hiring of speech recognition experts, many from IBM, including the current leaders of the firm.
Renaissance employs specialists with non-financial backgrounds, including mathematiciansphysicistssignal processing experts and statisticians. Renaissance is a firm run by and for scientists, employing preferably those with non-financial backgrounds for quantitative finance research like mathematicians, statisticians, pure and experimental physicists, astronomers, and computer scientists. Wall Street experience is frowned on and a flair for science is prized.
The firm's administrative and back-office functions are handled from its Manhattan office in New York City. The firm is secretive about the workings of its business and very little is known about them. In Simons left academia and started a hedge fund management firm called Monemetrics in a Long Island strip mall.
The firm primarily traded currencies at the start. It did not occur to Simons at first to apply mathematics to his business, but he gradually realized that it should be possible to make mathematical models of the data he was collecting. When Baum abandoned the idea of trading with mathematical models and took to fundamental trading, Simons brought in algebraist James Ax from Cornell University. Ax expanded Baum's models for trading currencies to cover any commodity future and subsequently Simons set up Ax with his own trading account, Axcom Ltd.
During the s, Ax and his researchers improved on Baum's models and used them to explore correlations from which they could profit. Medallion reaped a In Renaissance established its most famous and profitable portfolio, the Medallion fund, which used an improved and expanded form of Leonard Baum 's mathematical models improved by pioneering algebraist James Ax to explore correlations from which they could profit.
Simons and Ax started a hedge fund and named it Medallion in honor of the math awards that they had won. Ax had accounted for such a drawdown in his models and pushed to keep trading.
Simons wanted to stop to research what was going on. After a brief standoff, Simons pulled rank and Ax left. He worked with Sandor Straus, Jim Simons and another consultant, Henry Laufer, to overhaul Medallion's trading system during a six-month stretch. InBerlekamp led Medallion to a Straus took the reins of Medallion's revamped trading system and Medallion returned The Medallion fund is considered to be one of the most successful hedge funds ever.
It has averaged a The firm bought out the last investor in the Medallion fund in and the investor community has not seen its returns since then.Everyone in the industry worships Simons and RenTec as practically god-like. What they've managed to do shouldn't really be possible and is out of this world. According to Wikipedia over a 20 year period between andRenTec realized an And before anyone says that's a fluke, let's calculate the probability of such a "fluke" using some simplifying assumptions: 1.
RenTec made a mean annualized return of Therefore, I think we all can agree that we can reject the null hypothesis of RenTec having no alpha. And before someone says that it's a scam, there's no outside investors in the Medallion fund anymore, so if it is a scam, they would only be scamming their own employees.
And if that was the case, I think we would know. It didn't have to beat the market, it just had to beat regulators. I have nowhere near enough domain competence to comment on the plausibility of that scenario, other than to say that I suspect if it were that easy everyone would be doing it, so on those grounds alone I suspect the conspiracy theory I heard was incorrect. Someone more invested in the idea that it's a conspiracy would likely just argue that it isn't easy to be good at this or that there are economies of scale, so only one dominant player.
The book actually covers this. What they did is somewhat complex and involved obtaining leverage as much as the tax savings but basically they turned short-term capital gains into long-term gains. That sounds like misdirection. It's very common for hedge funds to use tons of leverage. It's not like getting this level of leverage is an unsolved problem.
But how exactly would this laundering work? I think he means that they funnel the income from fees into this "black box" fund and that's what creates the huge returns.
My instinct would be that there's no way this would get past auditors, but then again, Madoff got away with cooked books, so it's plausible. That's very unlikely to be true - most systematic hedge funds ran crazy high risk in the '80s and '90s. But even if you assume it's a coin toss as to whether they perform well in any given year, twenty good years in a row is impressive.
My best guess is that it's a combination of luck, skill, and hindsight bias.Renaissance Technologies is an odd name for a hedge fund management company.
But what it lacks in a name, it makes up in performance. In fact, its Medallion Fund has performed so well that Jim Simons returned all outside investor capital and manages the fund purely for himself and the employees of his firm.
The Medallion Fund is the flagship hedge fund of Renaissance Technologies; it uses sophisticated quantitative algorithms and the latest in computer hardware to detect fleeting anomalies in the financial markets of the world and profit from them ahead of anyone else. Its computers suck in an enormous quantity of time series data and through complex mathematical transformations these computers filter out the noise and look for non-stochastic price movements that can be predicted in advance.
It utilizes some of the mathematical techniques that made the Medallion Fund so successful and applies them to primarily large cap equities. The RIEF was launched in the middle of and performed decently until But init bounced back with a This is a staggering number and it boggles the mind to think about managing that much money.
Sure, a hedge fund manager can deliver staggering returns when the assets under management are low, but to continue delivering great returns on a fund this size would be quite an accomplishment. Jim Simons started Renaissance Technologies all the way back in Prior toSimons was primarily an academic. He taught math at MIT and Harvard and he later was appointed the chairman of the mathematics department at Stony Brook. Simons put his mathematical training to a much more lucrative use when he started Renaissance Technologies in At Renaissance, Simons became one of the first pioneers to apply advanced mathematical and statistical concepts to the financial markets and this proved to be quite remunerative.
So the raw return before fees was enormous to say the least. Apart from his accomplishment in finance, Jim Simons has made quite a few contributions to academia as well. Perhaps his biggest contribution apart from his multi-million dollar contributions to Stony Brook is the Chern-Simons theory which mere mortals like us may never understand.
It has something to do with quantum field theory and involves a level of mathematical abstraction that probably requires a genius IQ to understand. Simons has also been doing quite a bit of philanthropic work. He started the Paul Simons Foundation to fund educational and health initiatives and he is funding healthcare initiatives in Nepal through the Nick Simons institute.
Medallion Fund The Medallion Fund is the flagship hedge fund of Renaissance Technologies; it uses sophisticated quantitative algorithms and the latest in computer hardware to detect fleeting anomalies in the financial markets of the world and profit from them ahead of anyone else. Jim Simons Apart from his accomplishment in finance, Jim Simons has made quite a few contributions to academia as well.The most successful money maker in modern finance has one simple rule of thumb for investing: remove all emotion.
Jim Simons revolutionized investing when he left academia inat the age of forty, to begin trading. Relying on his experience and skills as a decorated mathematician, professor and code breaker, Simons looked at the market in a fundamentally different way when he launched his quantitative-focused fund Renaissance Technologies in from a strip mall in Long Island.
We get caught up in things like Uber and WeWork … you look at the best companies today, AmazonNetflixTencentit's all models. And that's the Simons solution. By deferring to models and the scientific method you don't fall for things like behavioral biases. Using his mathematical background and large sets of data, Simons set out to build computer models that he believed could identify and profit from patterns in the market. His algorithms are based on data from as far back as the s, according to Zuckerman, and they take advantage of even the smallest and shortest fluctuations in prices.
The average holding period is two days. Simons' unconventional background has proliferated throughout the firm, which is known for hiring people with PhDs in math and physics rather than traditional Wall Street players.
His years of success and outsized returns have placed him in a class of his own, even ahead of legendary investors like Ray Dalio, Warren Buffett and George Soros to name a few. While Simons no longer oversees the fund, which exclusively manages employee money, he remains active at the firm. Zuckerman said that the traditional method of investing — intuition, speaking with companies, analyzing balance sheets, etc.
Quantitative-based investing now accounts for the largest portion of daily stock trading, but few firms do it on the same scale as Renaissance.
They were paying attention to these kinds of things, the importance of big data, years before Mark Zuckerberg was even finished with grade school," Zuckerman said. But it hasn't been all smooth-sailing. There have been years like that delivered disappointing returnsand the fund is currently embroiled in a years-long dispute with the IRS over what the government says is unpaid taxes.
While all stock trading is now machine-based, algorithmic or algo trading has been blamed for outsized market swings and flash crashes. As quant investing continues to gain traction, SEC Chairman Jay Clayton told CNBC in September that the government organization is monitoring computer trading "to make sure that trading today is as fair and transparent as it was when it was voice trading. Simons, predictably, believes that quantitative trading is actually helping investors and the market more broadly by providing liquidity.
I think it's actually brought short term volatility down, not up. This investing approach, which comprises funds tracking market barometers like the major indicies and sectors, now accounts for nearly half of the US stock market. This could be bad for Renaissance since the fund relies on people and the market mispricing securities.
They use unbelievable data … But what happens if the behavior of the market changes and we'll see going forward. For now there are enough dentists and people like me trading the market that they [Renaissance] take advantage of, but we'll see.
If everybody goes to passive then the nature of the market could change," Zuckerman said. Zuckerman said that at the end of when stocks started selling off Simons was on vacation with his wife in California. Seeing red across the screen he called his money manager and said "shouldn't we be protecting here, shouldn't we be shorting?
Ultimately, the firm tries not to override the system. Simons perhaps summed up his investing approach best of all in a interview when he said he has no opinions on stocks.
Sign up for free newsletters and get more CNBC delivered to your inbox. Get this delivered to your inbox, and more info about our products and services. All Rights Reserved. Data also provided by. Skip Navigation. Markets Pre-Markets U. Key Points. Jim Simons, one of the greatest investors of all time, built his market-beating strategy around taking the human element out of investing.Renaissance Technologies, which was created by Jim Simons, counts Chipotle and Facebook among its largest investments.
While the Medallion fund is restricted to Renaissance employees, the hedge fund's remarkable track record means its trading patterns are worth noting. Its 10 biggest investments, based on a SEC filing for the quarter ended 30 September, are listed below. The fast-casual Mexican restaurant chain, which has more than 2, outlets, has largely recovered from a series of health scares a few years ago. Celgene is set to be acquired by Bristol Myers-Squibb, the hedge fund's largest holding.
Novo Nordisk is a Danish pharmaceutical company that makes medicines for diabetes, hemophilia, growth disorders, obesity, and other chronic conditions. Biogen develops treatments for Parkinson's, Alzheimer's, multiple sclerosis, and other neurological diseases. Gilead Sciences makes antivirus drugs to treat HIV, hepatitis, influenza, and other maladies.
The social-media titan owns WhatsApp and Instagram as well as Oculus, which makes virtual-reality headsets. Account icon An icon in the shape of a person's head and shoulders. It often indicates a user profile. Login Subscribe. My Account. World globe An icon of the world globe, indicating different international options. Theron Mohamed. Scroll down to see Renaissance's 10 biggest holdings.
View Business Insider's homepage for more stories. Bristol-Myers Squibb. Chipotle Mexican Grill. Novo Nordisk.
The secret behind the greatest modern day moneymaker on Wall Street: Remove all emotion
Palo Alto Networks. Vertex Pharmaceuticals. Gilead Sciences.Legendary Jim Simons, an awarded math genius and a former military code breaker, founded back in one of the nowadays largest quant hedge funds in the world, Renaissance Technologies.A Look Inside Russia’s Creepy, Innovative Internet
His curiosity for math developed very early as he dreamt about the numbers when he was only 3. Naturally, he graduated from a renowned MIT with a Bachelor degree in Mathematics and three years later he earned a doctorate.
Renaissance Technologies: Hedge Fund on a $7 Billion Winning Streak
Then, one un fortunate day when he openly stated out his pacifist views in regards to the war in Vietnam in public, he was fired, which made him return to intellectual circles. Due to the years of exceptional returns Renaissance Technologies had under his leadership, Jim Simons became one of the wealthiest hedge fund managers in the world.
Its main strategy is quant-oriented, which means that it relies only on mathematical and statistical methods for making investments. The team that Jim Simons gathered consists mostly of Ph.
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The crucial year for the fund was when Jim Simons together with algebraist James Ax launched its flagship the Medallion Fund, one of the most successful funds in the world. James Ax improved it and adapted it to research correlations. Medallion Fund uses high frequency-trading, taking advantage of the inefficiencies in the stock market, such as the execution of large transactions for example. This fund is known for achieving the best continuous returns in history — from through it generated an eye-popping return of In it delivered Two more of its funds also posted positive returns for the tough — its Renaissance Institutional Equities generated a return of 7.
When looking at these amazing performances, one must think that there are no tough years for math geniuses at Renaissance Technologies. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market.
Our short strategy outperformed the market by more than 40 percentage points since its inception two years ago. Our analysis indicates that an equal weighted portfolio of RenTec's top 5 stock picks generated a monthly return of 1.
So, it pays off to pay attention to RenTec's top 5 picks even though this is a quant fund.
The secret behind the greatest modern day moneymaker on Wall Street: Remove all emotion
The largest position was in Verisign, Inc. At the end of the Q3there were 29 smart investors from our database long this stock, which is up by 4 from the previous quarter. The second biggest stake the fund held in Align Technology, Inc.
Align Technology is a medical device company, mostly known by its innovative product called Invisalign clear aligners. The company recently announced that it will deliver its fourth quarter of financial results on January 29 th.
On September 30,37 hedge funds reported long positions in this company, up by 1 from one quarter earlier. During the third quarter, the fund also purchased 4. Among the biggest drops were Apple Inc. The fund sold 3. Disclosure: None.