James Simons is not that well known considering he:
A) Earned $1.7 Billion in 2006
B) Guided his hedge fund to an annualized net rate of return of 36% for the 19 years ending 2006
First let’s explain how his 2006 pay packet was derived. His hedge fund charges a management fee of 5% plus a performance fee of 44%. That’s pretty steep. What’s even more astonishing is that the fund earned a gross return of 79% in 2006. The fund, the Renaissance Technology Corp. Medallion fund, is closed to new investors and was managing roughly $6 billion in 2006.
Some other information that is worth noting:
Simons earned a bachelor’s degree in math from M.I.T. and later a Ph.D in math from the University of California, Berkeley. He has taught math at M.I.T. and Harvard, and once worked as a code-breaker for the Department of Defense. He is the co-developer of the Cherns-Simons theory (a mathematical theory). His hedge fund management company employs over 80 Ph.Ds. It has been rumoured that the trading algorithms of Medallion can be responsible for 10% of the daily trading volume on the NASDAQ.
When asked by Alpha Magazine if anyone asks him about Cherns-Simons Theory he replied, “All the time, by potential investors.” When further pressed to know if the investors understood it, he then replied, “No, I don’t even try.”
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