In the wake of weak performance for clients and strong gains for Renaissance Technologies employees, chairman James Simons is stepping back from managing his hedge fund. This according to a recent article in The Wall Street Journal.
The nearly 83-year-old Simons, described as a trailblazer in the “quantitative revolution that has swept the world of finance,” wrote in a letter to investors that he would retire as chairman on January 1st, noting, “This transition has been many years in the making.” He will continue to serve on the firm’s board.
According to the article, “In the 1980s and 1990s, when most of the investing world was reading annual reports, chatting with executives and relying on intuition, Mr. Simons decided to let computers make his trading moves.” He eventually built a fortune of more than $25 billion, but steadily reduced his role over the years to focus on science, education, and other philanthropies as well as providing major financial backing for Democratic party candidates.
Simons resigned as Renaissance’s chief executive in 2010 at which time he handed the baton to computer programmer Peter Brown, who will now take the reins as chairman.
“He faces an immediate challenge,” the article notes, as Brown will have to face with investors dissatisfied with the poor performance of some of the funds, “all of which are run using predictive models that the firm almost never interferes with.” Some investors are complaining that the contrasting healthy gains by the firm’s employee-owned Medallion fund only makes the sting worse—although Renaissance staffers explain that this is due to the shorter holding periods used for that fund.
According to the article, Renaissance executives seem confident that their struggling funds will comeback. In his letter, Simons noted in his letter, “I know it has been a difficult year and that Renaissance has been through challenging periods before, but I continue to believe in our processes and our people.”