Renaissance Technologies

Background

As I browsed the Internet, found out that Robert Mercer is giving up his day job as a CEO. And, returning to being a researcher.

Tradition

His trajectory follows that of some before him.

Notably Bill Gates, at 55 years old, self demoted from Microsoft CEO to Founder and Technology Advisor.

And, Larry Ellison at 70 years old, down promoted from Oracle CEO to Chief Technology Officer ( CTO ).

 

Renaissance Technologies

Will come back and talk about Robert Mercer in a later post.

Persons

James Simons

Wikipedia
Link

James was born to a jewish family.  He is an only child.

He received a BS degree in mathematics from MIT.  And, a PHD in mathematics from Berkeley at the age of 23.

In 1973, he was asked by IBM to attack the block cipher Lucifer; Lucifer is an earlier algorithm of Data Encryption Standard ( DES ).

James Simons founded Renaissance Technologies in 1982.

In 2004, he founded Math for America a nonprofit whose mission is to improve math education in the US.  It intends to do so by recruiting highly qualified teachers.

 

Personal Life

Simon shies from the shining camera and offers this quotation from Animal Farm – “God gave me a tail to keep off the flies. But I’d rather have had no tail and no flies“.

Progeny

  1. Paul
    • In 1996, his son, Paul, 34 at the time, was ran over while riding his bicycle
  2. Nicholas
    • In 2003, his son, Nicolas, drowned on a trip to Bali, Indonesia
  3. Nat
    • His son, Nat, follows after his father as an investor and philanthropist

Practices

Quantitative trading

Researchers collect decades of data in petabytes data warehouses.

The data is then trolled for statistical probabilities.

To facilitate this process efficient algorithms are trained at scalable technology architectures.

The scientific success is now commonly know as Big Data.

Investing without Investors

Renaissance hires scientist without financial training; it prefers those trained in the hard science such as mathematics, physics, statistics, and computational fields such as signal processing.

Quants: the maths geniuses running Wall Street

Sarfraz Manzoor
2013-July-23rd
Link
Of his 200 employees, ensconced in a fortress-like building in unfashionable Long Island, New York, a third have PhDs, not in finance, but in fields like physics, mathematics and statistics. Renaissance has been called “the best physics and mathematics department in the world” and, according to Weatherall, “avoids hiring anyone with even the slightest whiff of Wall Street bona fides. PhDs in finance need not apply; nor should traders who got their start at traditional investment banks or even other hedge funds. The secret to Simons’s success has been steering clear of the financial experts.”

Not surprisingly, old-style traders hate the quants. Not only have they pushed them off the top of the trading tree, there is also a basic clash of cultures. They are not flash and, invariably, rather awkward socially. As one anonymous software salesman who deals with hedge funds relates on a blog: “They don’t do small talk. When one of them picks me up from reception and we ride the elevator, I have learnt not to start chatting away about, say, the weather. They simply don’t seem to understand. They think you’re attempting to communicate something apparently important about meteorological conditions. Same thing with innocent jokes… blank stares.”

 

Timeline

  1. Taxes
    • 2014-July-22nd
      • On July 22, 2014, Simons was subject to bipartisan condemnation by the U.S. Senate Permanent Subcommittee on Investigations for the use of complex barrier options to shield day-to-day trading (usually subject to higher ordinary income tax rates) as long-term capital gains. “Renaissance Technologies was able to avoid paying more than $6 billion in taxes by disguising its day-to-day stock trades as long term investments,” said Sen. John McCain (R., Ariz.), the committee’s ranking Republican, in his opening statement. “Two banks and a handful of hedge funds developed a complex financial structure to engage in highly profitable trades while claiming an unjustified lower tax rate and avoiding limits on trading with borrowed money,” said Sen. Carl Levin (D., Mich.) in his prepared remarks.
      • US Senate
        • Abuse of Structured Financial Products: Misusing Basket Options to Avoid Taxes and Leverage Limits
          Link
    • An article published in the New York Times in 2015 said that Simons was involved in one of the biggest tax battles of the year, with Renaissance Technologies being “under review by the I.R.S. over a loophole that saved their fund an estimated $6.8 billion in taxes over roughly a decade.”
      • New York Times
        • For the Wealthiest, a Private Tax System That Saves Them Billions
          Link

Politics

Donations

OpenSecrets.org

Courtesy of opensecrets.org here are the top ten contributors for the 2016 Election cycle.

Tabulated

Link

 

Contributor Total Democratic Amount Republican Amount Democratic % Republican %
1 Steyer, Thomas & F. & Kathryn Ann
Fahr LLC/Tom Steyer
San Francisco, CA
91 million 91 million 100%
2 Adelson, Sheldon G. & Miriam O.
Las Vegas Sands/Adelson Drug Clinic
Las Vegas, NV
82 million 40 thousand 82 million 100%
3 Sussman, S. Donald
Paloma Partners
Ft Lauderdale, FL
40 million 40 million 100%
4 Eychaner, Fred
Newsweb Corp
Chicago, IL
37 million 37 million  100%
5 Moskovitz, Dustin & Cari, Tuna
Asana Inc
San Francisco, CA
27 million 25 million 100%
6 Simons, James H. & Marilyn H.
Renaissance Technologies/Simons Fdtn
New York, NY
26 million 26 million 100%
7 Singer, Paul
Elliott Management
New York, NY
26 million 26 million 100%
8 Mercer, Robert L. & Diana
Renaissance Technologies
East Setauket, NY
25 million 25 million  100%
9 Uihlein, Richard & Elizabeth
Uline Inc
Lake Forest, IL
23 million  23 million 100%
10 Bloomberg, Michael R.
City of New York, NY
New York, NY
23 million 23 million 100%

 

Explanation

  1. The 6th and 8th contributors are from Renaissance Technologies

References

  1. The Medallion Fund
    • Bloomberg
      • Katherine Burton
        • Inside a Moneymaking Machine Like No Other
          Link
  2. Quants
    • The Telegraph
      • Sarfraz Manzoor
        • Quants: the maths geniuses running Wall Street
          Link

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