Award-winning mathematician Jim Simmons left behind an illustrious academic career to dive into the world of finance – a world he knew nothing about – and became one of the most successful Wall Street investors in history. died Friday at his home in Manhattan. He was 86 years old.
His death was confirmed by his publicist Jonathan Gastarter, but he did not specify the cause of death.
After publishing groundbreaking work on pattern recognition, string theory, a framework that combines geometry and topology with quantum field theory, Simmons decided to apply his genius to more mundane topics. I decided to make as much money as possible in a short period of time. Possible.
So at age 40, he opened a storefront office in a Long Island strip mall and set out to prove that trading in commodities, currencies, stocks, and bonds was almost as predictable as calculus and partial differential equations. did. He turned down financial analysts and business school graduates in favor of like-minded mathematicians and scientists.
Mr. Simmons has turned his new company, Renaissance Technologies,'s four investment funds into virtual currency printing machines by equipping his colleagues with sophisticated computers that can process large amounts of data filtered through mathematical models.
The largest of these funds, Medallion, has generated more than $100 billion in trading profits in the 30 years since its founding in 1988. During this period, it generated an unprecedented average annual return of 66%.
This was a much better long-term performance than that achieved by prominent investors like Warren Buffett and George Soros.
“In the world of investing, he is second to none,” wrote Gregory Zuckerman, one of the few journalists to have interviewed Mr. Simmons and author of his biography, “The Man Who Solved the Markets.”
By 2020, Mr. Simmons' approach to markets, known as quantitative investing or quantitative investing, accounted for nearly a third of Wall Street's trading work. Even traditional investment firms that relied on company research, intuition and personal connections felt forced to adopt some of Mr. Simmons' computer-driven methodologies.
The Renaissance Fund was Wall Street's largest quantitative fund for most of its life, and its investment style sparked major changes in the way hedge funds trade and the way wealthy investors and pension funds make money. .
By the time he stepped down as chief executive of the business in 2010, Mr. Simons was worth $11 billion (almost $16 billion in today's currency), and his wealth had doubled a decade later.
As chairman of Renaissance, Mr. Simmons continued to oversee the company's finances, but increasingly devoted his time and wealth to philanthropy. The Simons Foundation has become one of the largest private funders of basic science research. And his Flatiron Institute used Renaissance analytical techniques for research in biology, astronomy, and quantum physics.
In 2011, his foundation donated $150 million to Stony Brook University, with most of the money going to medical research. This was the largest gift in the history of the State University of New York, and at the time was called the sixth largest gift to an American public university.
James Harris Simmons was born April 25, 1938, in Brookline, Massachusetts, the only child of Matthew Simmons, a shoe factory owner, and Marcia (Cantor) Simmons, a family manager. A mathematical genius, he was only 23 years old when he completed his undergraduate studies at the Massachusetts Institute of Technology and earned his doctorate at the University of California, Berkeley.
Beginning in 1964, Mr. Simons taught at MIT and Harvard University while simultaneously working as a Soviet code breaker at the Institute for Defense Analyses, a federally funded nonprofit organization. However, he was fired from the Institute in 1968 for publicly expressing his strong anti-Vietnam War views.
For the next ten years, he taught mathematics at Stony Brook University on Long Island, becoming chair of the mathematics department. While running this department, he won the nation's highest award in geometry in his 1975 year.
And in 1978, he gave up his academic career and founded Manemetrics, an investment firm with offices in a small strip mall in Setauket, just east of Stony Brook on Long Island's North Shore. He had never taken a finance course or shown more than a passing interest in the markets. But he believes that he and a small team of mathematicians, physicists, and statisticians (mostly former university colleagues) can analyze financial data, identify market trends, and place profitable trades. I was confident that I could do it.
After four roller coaster years, Monemetrics has been renamed Renaissance Technologies. Mr. Simons and a growing staff of former academics initially focused on currencies and commodities. Every conceivable type of data is fed into a sophisticated computer, including news reports on political unrest in Africa, banking statistics in small Asian countries, and soaring potato prices in Peru, a pattern that allows Renaissance to consistently reap huge annual profits. collected.
But the real bumper crop came when the Renaissance entered a much larger market than currencies or commodities: stocks.
Stocks and bonds have long been thought of as the preserve of Wall Street brokerages, investment banks, and mutual fund companies, but their young, energetic MBAs analyze public companies and share their findings with senior asset managers. Senior asset managers relied on experience and intuition to select markets. winner. They initially ridiculed Renaissance math geeks and their quantitative methods.
On several occasions, Simon's methodology led to costly mistakes. His company used a computer program to buy so many Maine potato futures that it almost controlled the market. This ran into opposition from the Commodity Futures Trading Commission, the regulator in charge of futures trading. As a result, Mr. Simmons had to sell his investments and miss out on the possibility of a large profit.
But often because he was so successful, his biggest problem was hiding his trade and research techniques from his competitors. “Visibility leads to competition. In all respect for the principles of free enterprise, less is more,” he wrote in a letter to his clients.
It wasn't just business rivals who viewed Mr. Simmons' accomplishments with envy or suspicion. In 2009, Renaissance faced a revolt from outside investors due to wide disparities in the performance of Technologies' various portfolios. The Medallion Fund, available only to current and former Renaissance employees, rose 80% in the previous year, while the Renaissance Institutional Stock Fund, offered to outside investors, fell 16% in 2008.
In July 2014, Mr. Simmons and his company received bipartisan condemnation from the Senate Permanent Subcommittee on Investigations for using financial derivatives to disguise daily transactions as long-term capital gains. “Renaissance Technologies was able to avoid paying more than $6 billion in taxes,” Sen. John McCain, R-Ariz., argued in his opening statement at the subcommittee hearing.
Both Mr. Simons and his former co-chief executive, Robert Mercer, were among the biggest donors to politicians and political campaigns. While Simons generally supported liberal Democrats, Mercer is an ardent right-winger who became a major donor to Donald Trump's presidential campaign.
In 2017, Simmons, then chairman of Renaissance Technologies, fired Mercer as CEO, saying Mercer's political activities had threatened to resign other key Renaissance executives. Mr. Mercer remained as a researcher. According to both men, the two remained on friendly terms and continued to socialize.
As he grew older and wealthier, Mr. Simmons enjoyed a lavish lifestyle. He bought a 220-foot yacht for $100 million, spent $50 million on an apartment on Manhattan's Fifth Avenue, and owned a 14-acre estate in East Setauket overlooking Long Island Sound. A chain smoker, he refused to put out his cigarette in the office or at meetings, instead willingly paying the fine.
His first marriage, to computer scientist Barbara Bluestein, with whom he had three children, Elizabeth, Nathaniel, and Paul, ended in divorce. He then married Marilyn Hollys, an economist and former undergraduate student at Stony Brook University, where he received his Ph.D. They had two children, Nicholas and Audrey.
Paul Simmons, 34, died in a bicycle accident in 1996, and Nicholas Simmons, 24, drowned in Bali, Indonesia, in 2003. Surviving are his wife and other children, as well as five grandchildren and one great-grandchild.
According to her biographer, Simmons lamented her sons' deaths to a friend, saying, “My life is either ace or deuce.''
Hannah Fidelman contributed reporting.