As I wrote in an earlier blog, I continually look for cochamim, "wise ones" to learn from. One good way is to look for the footprints in the sand and James H. Simons is making big footprints. In fact, his footprints are so large that I'm leery about their accuracy.
James H. Simons is an accomplished mathematician turned hedge fund manager. For 2005, he was the top money-maker with his reported take-home pay to be $1.5 billion. The math for his compensation does not require a Ph.D; he earns a 5% fee plus 44% of outperforming his benchmark. (And to think that I was squeamish about 2% plus 20% of outperformance!) As if that compensation number is not mind-boggling enough, his investing techniques are even more alien.
He is a "high frequency" hedge fund manager. This new breed uses advanced mathematical and scientific processes to detect the "visible hand" in the tick by tick trades in the stock market. This relatively unknown trader's firm is reputed to make over 10% of the daily trades on the NASDAQ.
His returns are extraordinary. Apparently he has exceeded 35% per year for over 20 years. But these returns are not verified nor are his processes public. For years, the claim has been made that his firm, Renaissance Technologies, would not market, nor even need to market. Despite those claims, Renaissance cranked up the marketing and moved from $5 billion to $16 billion in assets under management (AUM) by the end of the year 2006.
Was $1.5 billion in compensation not enough?
Scott,
ReplyDeleteYou must be a frummie, or expecting only frummies to know what you mean by the chachamim! Funny.
Do you live in the frum community in Dallas? How do you like it? I am from LA and am considering relocating.
Regarding your post, I have plenty of information on it, but I doubt you'd be able to use it. Even Simons, with all his prowess has been more of an overseer for years. Also, he has two funds, the Medallion fund (private) which is the one with the real world returns of 35% since inception (this is 100% true) and then the new fund, Rennaissance International Equities Fund (RIEF) which accepts money from institutions (min. $20M) and rich individuals. If you don't mind, you could put up your email (without writing .com) and I think we could have a lively chat!