James Simons’ 2008 performance defies belief. In a year when most hedge funds lost money and scores closed, his renowned (and secretive) Medallion Fund surged 80 percent, its second-best annual performance. And that’s after Simons took his 5 percent management fee and 44 performance fee. As usual, Simons, 70, won’t talk about how he did it except to say it involved rapid electronic trading aimed at capturing tiny inefficiencies in price. The scant public-record insight into his activity shows the equity part of his holdings at the end of the third quarter of 2008 worth about $38 billion (with leverage), only half its worth just 15 months earlier (he sold a chunk). Few besides Simons, his partners and staff got to participate in the gains; the fund, which has made money for years, is closed to outsiders.
Simons did show some mortality. Two relatively new funds — both open to outsiders — were losers. Renaissance Institutional Equities Fund was down 16 percent; Renaissance Institutional Futures Fund was off 12 percent. As a result, Simons recently agreed to waive his management fees on the futures fund. The parent firm, Renaissance Technologies Corp., had $25 billion in assets at year-end, but began 2009 with about $20 billion, suggesting that Simons either returned capital at year-end, suffered redemptions, or both. A spokesman would not comment.
Even so, Simons probably earned substantially more than the $2.8 billion he made in 2007. And Renaissance isn’t shrinking: It recently expanded its Manhattan offices by 6,700 square feet.
