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Jim Simons

James Simons
Simons in 2007
Born(1938-04-25)April 25, 1938
DiedMay 10, 2024(2024-05-10) (aged 86)
EducationMassachusetts Institute of Technology (BS)
University of California, Berkeley (MS, PhD)
Occupation(s)Hedge fund manager, investor, mathematician, philanthropist
Known forFounding and managing Renaissance Technologies
Simons formula
Chern–Simons form
Spouses
(m. 1959; div. 1974)
Marilyn Hawrys
(m. 1977)
[1]
Children5, including Nat[2]
AwardsOswald Veblen Prize (1976)[3]
Scientific career
FieldsDifferential geometry, cryptography, quantitative financial analysis
ThesisOn the Transitivity of Holonomy Systems (1962)
Doctoral advisorBertram Kostant
Doctoral studentsJeff Cheeger

James Harris Simons (April 25, 1938 – May 10, 2024) was an American hedge fund manager, investor, mathematician, and philanthropist.[4] At the time of his death, Simons' net worth was estimated to be $31.4 billion, making him the 55th-richest person in the world.[4] He was the founder of Renaissance Technologies, a quantitative hedge fund based in East Setauket, New York. He and his fund are known to be quantitative investors, using mathematical models and algorithms to make investment gains from market inefficiencies. Due to the long-term aggregate investment returns of Renaissance and its Medallion Fund, Simons was described as the "greatest investor on Wall Street", and more specifically "the most successful hedge fund manager of all time".[5][6][7]

Simons was known for his studies on pattern recognition.[8] He developed the Chern–Simons form (with Shiing-Shen Chern), and contributed to the development of string theory by providing a theoretical framework to combine geometry and topology with quantum field theory.[9]

In 1994, Simons and his wife, Marilyn, founded the Simons Foundation to support research in mathematics and fundamental sciences. The foundation is the top benefactor of Stony Brook University, Marilyn's alma mater, and is a major contributor to his alma maters, the Massachusetts Institute of Technology and the University of California, Berkeley. Simons was a member of the boards of the Stony Brook Foundation, the MIT Corporation, and the Simons Laufer Mathematical Sciences Institute in Berkeley, as well as chair of boards of Math for America, the Simons Foundation, and Renaissance Technologies.[10][11] In 2023, the Simons Foundation gave $500 million to Stony Brook University, the second-largest donation to a public university in American history.[12] In 2016, the International Astronomical Union named asteroid 6618 Jimsimons, which Clyde Tombaugh discovered in 1936, after Simons in honor of his contributions to mathematics and philanthropy.[13]

Early life and education

James Harris Simons was born on April 25, 1938,[14] to an American Jewish family,[15] the only child of Marcia (née Kantor)[16] and Matthew Simons, and raised in Brookline, Massachusetts.[17]

He received a bachelor's degree in mathematics from MIT in 1958[18] and a PhD in mathematics from Berkeley under the supervision of Bertram Kostant in 1961 at the age of 23.[18] After graduating from MIT, Simons traveled from Boston to Bogotá, Colombia, on a motor scooter.[19]

Academic and scientific career

Simons's mathematical work primarily focused on the geometry and topology of manifolds. His 1962 Berkeley PhD thesis, written under the direction of Bertram Kostant, gave a new proof of Berger's classification of the holonomy groups of Riemannian manifolds. He subsequently began to work with Shiing-Shen Chern on the theory of characteristic classes, eventually discovering the Chern–Simons secondary characteristic classes of 3-manifolds. Later, mathematical physicist Albert Schwarz discovered early topological quantum field theory, which is an application of the Chern–Simons form. It is also related to the Yang-Mills functional on 4-manifolds, and has had an effect on modern physics. These and other contributions to geometry and topology led to Simons becoming the 1976 recipient of the American Mathematical Society (AMS) Oswald Veblen Prize in Geometry.[20] In 2014, he was elected to the U.S. National Academy of Sciences.[21]

In 1964, Simons worked with the National Security Agency to break codes.[22] Between 1964 and 1968, he was on the research staff of the Communications Research Division of the Institute for Defense Analysis (CRD of IDA) and taught mathematics at the Massachusetts Institute of Technology and Harvard University. Simons also tried starting a trading company named iStar with colleagues including Richard Leibler, but was discovered by management and the effort failed.[23] After being forced to leave the IDA due to his public opposition to the Vietnam War, he joined the faculty at Stony Brook University.[19] From 1968 to 1978, he served as chair of the math department at Stony Brook University.[24] Simons was asked by IBM in 1973 to attack the block cipher Lucifer, an early but direct precursor to the Data Encryption Standard (DES).[25] Simons founded Math for America, a nonprofit organization, in January 2004 with a mission to improve mathematics education in United States public schools by recruiting more highly qualified teachers.[26]

Business career

Renaissance Technologies

External videos
video icon A Rare Interview with the Mathematician Who Cracked Wall Street, 23:03, TED Talks[27]
video icon The Carnegie Medal of Philanthropy Ceremony – 17th October 2013, 1:31:40 (Simons section at 52:00–1:05:30), Scottish Parliament[28]

Simons founded a hedge fund management firm called Monemetrics, which he later renamed to Renaissance Technologies. He gradually realized that it should be possible to make mathematical models of the data he was collecting. After hiring mathematicians such as Leonard E. Baum and James Ax, Renaissance established the Medallion Fund in 1988.[29][30][31]

Medallion, the main fund which is closed to outside investors, has earned over $100 billion in trading profits since its inception in 1988. This translates to a 66.1% average gross annual return or a 39.1% average net annual return between 1988 – 2018.[32] Renaissance Technologies manages three other funds – Renaissance Institutional Equities Fund (RIEF), Renaissance Institutional Diversified Alpha (RIDA) and Renaissance Institutional Diversified Global Equity Fund – which, as of April 2019, totalled approximately $55 billion in combined assets and were open to outside investors.[32]

Renaissance employs specialists with non-financial backgrounds, including mathematicians, physicists, signal processing experts and statisticians. The firm's latest fund is the Renaissance Institutional Equities Fund (RIEF).[33] RIEF has historically trailed the firm's better-known Medallion fund, a separate fund that contains only the personal money of the firm's executives.[34]

"It's startling to see such a highly successful mathematician achieve success in another field," says Edward Witten, professor of physics at the Institute for Advanced Study in Princeton, New Jersey and considered by many of his peers to be the most accomplished theoretical physicist alive.[34]

In 2006, Simons was named Financial Engineer of the Year by the International Association of Financial Engineers. In 2020, he was estimated to have personally earned $2.6 billion,[35] $2.8 billion in 2007,[36] $1.7 billion in 2006,[37] $1.5 billion in 2005[38] (the largest compensation among hedge fund managers that year),[39] and $670 million in 2004. On October 10, 2009, Simons announced he would retire on January 1, 2010, but remain at Renaissance as nonexecutive chairman.[40]

Simons in 2007

Wealth and personal life

In 2014, Simons reportedly earned US$1.2 billion, including a share of his firm's management and performance fees, cash compensation and stock and option awards.[41] According to Forbes magazine, Simons had a net worth of $30 billion in 2023, making him the 25th-richest person on the Forbes 400 list.[42] In 2018, he was ranked 23rd by Forbes,[43] and in October 2019, his net worth was estimated to be $21.6 billion.[44] In March 2019, he was named one of the highest-earning hedge fund managers and traders by Forbes.[45] At the time of his death, Simons' net worth was estimated to be $31.4 billion, making him the 55th-richest person on Forbes' 2024 The World's Billionaires list.[4]

Simons shunned the limelight and rarely gave interviews, citing Benjamin the Donkey in Animal Farm for explanation: "'God gave me a tail to keep off the flies. But I'd rather have had no tail and no flies.' That's kind of the way I feel about publicity."[32][46]

In 1996, his son Paul, aged 34, was riding a bicycle, when he was killed by a car in Long Island.[22] In 2003, his son Nicholas, aged 24, drowned on a trip to Bali, Indonesia. His son Nat Simons is an investor and philanthropist and his daughter Liz Simons is an educator and philanthropist.[47][48]

Simons owned a motor yacht named Archimedes. It was built at the Dutch yacht builder Royal Van Lent and delivered to Simons in 2008.[49][48]

Simons did not wear socks.[50][51][52]

Political and economic views

Simons was a major contributor to Democratic Party political action committees. According to OpenSecrets, Simons was ranked the #5 donor to federal candidates in the 2016 election cycle, coming behind Renaissance Technologies' co-CEO Robert Mercer, who ranked #1 and generally donates to Republicans.[53] Simons donated $7 million to Hillary Clinton's Priorities USA Action,[54] $2.6 million to the House and Senate Majority PACs, and $500,000 to EMILY's List.[53] He also donated $25,000 to Republican senator Lindsey Graham's super PAC.[53] From 2006 Simons contributed about $30.6 million to federal campaigns.[53] Since 1990, Renaissance Technologies has contributed $59,081,152 to federal campaigns and since 2001, and has spent $3,730,000 on lobbying as of 2016.[55]

In August 2020, Simons donated $1.5 million to the Senate Majority PAC, a Democratic super-PAC.[56]

Controversies

According to The Wall Street Journal in May 2009, Simons was questioned by investors on the dramatic performance gap of Renaissance Technologies' portfolios. The Medallion Fund, which has been available exclusively to current and past employees and their families, surged 80% in 2008 in spite of hefty fees; the Renaissance Institutional Equities Fund (RIEF), owned by outsiders, lost money in both 2008 and 2009; RIEF declined 16% in 2008.[57]

On July 22, 2014, Simons was subject to bipartisan condemnation by the U.S. Senate Permanent Subcommittee on Investigations for the use of complex basket options to shield day-to-day trading (usually subject to higher ordinary income tax rates) as long-term capital gains. "Renaissance Technologies was able to avoid paying more than $6 billion in taxes by disguising its day-to-day stock trades as long term investments", said Sen. John McCain (R., Ariz.), the committee's ranking Republican, in his opening statement.[58]

An article published in The New York Times in 2015 said that Simons was involved in one of the biggest tax battles of the year, with Renaissance Technologies being "under review by the IRS over a loophole that saved their fund an estimated $6.8 billion in taxes over roughly a decade."[59] In September 2021, it was announced that Simons and his colleagues would pay billions of dollars in back taxes, interest and penalties to resolve the dispute, one of the biggest in IRS history.[60][61]

Philanthropy

In total, Simons has given over $4 billion to philanthropic causes.[62] Simons and his wife, Marilyn Hawrys Simons, co-founded the Simons Foundation in 1994, a charitable organization that supports projects related to education and health, in addition to scientific research.[2] The Simons Foundation established the Simons Foundation Autism Research Initiative (SFARI) in 2003 as a scientific initiative within the Simons Foundation's suite of programs. SFARI's mission is to improve the understanding, diagnosis and treatment of autism spectrum disorders.[63]

In 2004, Simons founded Math for America with an initial pledge of $25 million from the Simons Foundation, a pledge he later doubled in 2006.[64] The foundation continues to fund its operations, contributing nearly $22 million in 2018.[65]

Simons was among the largest contributors to his undergraduate alma mater, MIT. The couple and their foundation have funded the renovation of the building housing the mathematics department, which in 2016 was named in their honor, and endowed the Simons Center for the Social Brain. Simons was a life member emeritus of the MIT Corporation.[66]

Simons was a major benefactor of his graduate alma mater, Berkeley. On July 1, 2012, the Simons Foundation pledged $60 million to Berkeley to establish the Simons Institute for the Theory of Computing, the world's leading institute for collaborative research in theoretical computer science.[67][68] In 2020, the foundation made separate grants to Berkeley totaling over $46 million to increase the institute's endowment and support its operations. In October 2023, the university announced that Simons' foundation awarded the institute an additional $25 million as a matching pledge.[69][70][71] Simons and his wife also have made major grants to Berkeley affiliates, notably to the Simons Laufer Mathematical Sciences Institute and Berkeley Lab.[72][73][74]

The Simons Foundation established the Flatiron Institute in 2016,[75] to house five groups of computational scientists (each with 60 or more PhD level researchers). The institute consists of four cores or departments: CCB (Center for Computational Biology), CCA (Center for Computational Astrophysics), CCQ (Center for Computational Quantum mechanics), CCM (Center for Computational Mathematics), and CCN (Center for Computational Neuroscience).[76]

In memory of his son Paul, whom he had with his first wife, Barbara Simons, he established Avalon Nature Preserve, a 130-acre (0.53 km2) nature preserve in Stony Brook.[77] The Avalon preserve was extended to 216 acres in 2024.[78]

Another son, Nick Simons, drowned at age 24 while on a trip to Bali in Indonesia in 2003. Nick had worked in Nepal. The Simons have become large donors to Nepalese healthcare through the Nick Simons Institute.[79][80]

In 2006, Simons and his wife, Marilyn, donated $25 million to Stony Brook University through the Stony Brook Foundation, the largest donation ever to a State University of New York school at the time.[81] On February 27, 2008, then Gov. Eliot Spitzer announced a $60 million donation by the Simons Foundation to found the Simons Center for Geometry and Physics at Stony Brook, the largest gift to a public university in New York state history.[82] In 2011, the couple broke that record again with a $150 million donation to Stony Brook, which went to research in medical sciences, the construction of a life sciences building, the creation of a neurosciences institute and a center for biological imaging, the study of cancer and infectious diseases, 35 new endowed professorships and 40 fellowships for graduate students. In order to secure the donation, Stony Brook was allowed to raise its annual tuition in opposition to traditional New York state policy.[83] In 2023, the university announced that it had received a $500 million endowment gift from the Simons Foundation, the second-largest gift ever to a public university.[12][84]

Death

Simons died peacefully in New York City on May 10, 2024, at age 86, surrounded by his family.[85] He was active in the work of his foundation until the end of his life.[86]

Legacy and awards

In 2008, he was inducted into Institutional Investors Alpha's Hedge Fund Manager Hall of Fame.[87]

He was named by the Financial Times in 2006 as "the world's smartest billionaire".[88] He was elected to the American Philosophical Society in 2007.[89] In 2011, he was included in the 50 Most Influential ranking of Bloomberg Markets Magazine.[90]

A book about Simons and his investing methods, The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman, was released November 5, 2019.[52] He was awarded honorary doctorates by York University[91] and the University of Edinburgh[92] in 2016, and Trinity College Dublin[93] in 2018.

Publications and works

See also

References

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Further reading