Renaissance Technologies LLC is a Long
Island-based hedge fund management firm whose core investment strategy involves complex mathematical equations
and statistical methods. Renaissance funds' fees are high even by hedge fund standards: One fund charges a 5%
management fee and a 44% incentive fee.
The firm is known for fast trading. Nearly all of the trading for its flagship Medallion fund is automated. Medallion has posted average returns of about 45% a year, after fees, since it launched in 1988. The firm is considering shuttering its only two funds that are open to outside investors after mediocre performance. Even so, Renaissance currently has no plans for changes to the firm.
Renaissance's HQ is located on a leafy campus on Long Island's North Shore with a lecture hall, a library with a fireplace and a gym. The firm doesn't have much of a trading floor and most employees work in their own offices. Computer servers, with names like Laddersnake, Howler3 and Neon, stand in rows in of 6 1/2-foot-tall metal cages, in three rooms the size of tennis courts. The complex is adding new buildings for more servers, offices and possibly a squash court. The firm also has offices in New York City, San Francisco and London.
Renaissance was founded in 1982 by James Simons, an MIT and University of California at Berkeley alum with degrees in mathematics and literature. Simons was a quant pioneer, one of the first to use mathematical models and computers to predict markets. He recently stepped down, succeeded by Peter Brown and Bob Mercer, co-heads of the firm, who developed voice-recognition technology for International Business Machines Corp. before joining Renaissance.
M.B.A.s and Street jockeys are
not the favored candidates for any open jobs. The firm likes quant jocks -- Ph.D.s and wonky sorts with mathematical backgrounds. About 90 employees are Ph.D.s, including experts in quantum physics and artificial intelligence.
Though the Financial Times named Simons the world's "smartest" billionaire in 2006, he was among Bernard Madoff's victims, directing $8 million of Stony Brook University's money to Madoff's funds. Simons was chairman of the Stony Brook Foundation at the time. During the same period, Simons donated $25 million to the Foundation. In retirement, Simons, who remains chairman, is spending time on math education, fighting autism, and his 219-foot yacht, Archimedes.
Brown has a Ph.D. in computer science from Carnegie Mellon, is talkative, politically liberal, and competitive, given to challenging employees to feats of strength. Mercer, a political conservative and National Rifle Association member with a Ph.D. in computer science from the University of Illinois, has a huge model train in his basement and is known to whistle to himself during meetings, and rarely interacts with employees outside official meetings.