Renaissance Technologies, Inc. (NASDAQ:RenTech)
Renaissance Technologies LLC, also known as RenTech or RenTec, is a trading firm that specializes in quantitative trading. The company’s quantitative models are based on mathematical analysis. These models help investors make informed decisions about investments and market trends. The firm is based in East Setauket, New York.
Jim Simons
Jim Simons is a mathematical genius and investor who made a name for himself as the “Quant King.” He has become an influential figure in the world of investing thanks to his quantitative approach. He founded Renaissance Technologies and the Medallion Fund, and has also worked as a professor at Harvard and MIT. He also served as the chairman of the mathematics department at Stony Brook University. In addition to his financial success, Simons has an extensive background in government work, including work as a codebreaker for the National Security Agency during the Vietnam War.
Jim Simons’ company began life as Monemetrics and quickly changed its name to Renaissance Technologies. He began hiring mathematicians from IDA and data-modeling types from Stony Brook University to build a model to trade fundamentally. He recruited Leonard Baum, who was co-author of the Baum-Welch algorithm, and James Ax, an algebraist from Cornell. They worked together to expand Baum’s models to include commodity trading. Axcom Ltd. was born out of this work.
Howard Morgan
Howard Morgan and Renaissance Technologies are two of the most successful quant hedge funds in the world. With Union Square Ventures and Peter Diamandis backing them, the two have built several game-changing firms. The two men have a background in entrepreneurship and both have a wealth of knowledge and experience.
Howard Morgan is also a mentor and advisor to startups. Before starting Renaissance Technologies, he was a professor at the Wharton School and the Moore School of Business at the University of Pennsylvania. He is also an investor and co-founder of First Round Capital. This venture fund was the first of its kind and Howard Morgan is a senior advisor there.
Mathematicians
Renaissance Technologies was founded by Jim Simons, who was a brilliant mathematician and believed that he could build numerical models to predict profitability in the stock market. He named the company “Monemetrics,” combining the words money and econometrics, to describe his method of analyzing financial data for economic gain. In this way, the company claims to make predictions with a high degree of accuracy.
Renaissance Technologies started out as Monemetrics, a small company that recruited mathematicians and data-modeling types from Stony Brook University and IDA. The first hire was mathematician Leonard Baum, the co-author of the Baum-Welch algorithm. Baum soon abandoned the idea of using mathematical models for fundamental trading in favor of a broader, more practical approach. Another hire, James Ax, an algebraist from Cornell University, expanded Baum’s models to include commodity trading. He then set up Axcom Ltd., which grew into the Medallion fund.
Quantitative trading
The RenTech-Millenium melee has caused an uproar in the systematic trading community. As a result, firms have been rushing to protect their intellectual property. Systematic trading executives have realized that ordinary employees can damage companies’ reputations by stealing trade secrets and proprietary information. In an open office culture, this could be a catastrophic situation. While NDAs and trade secret laws have provided some comfort, more stringent noncompetes are now being introduced to protect companies from rogue employees.
As one of the early adopters of quantitative investing, Renaissance Technologies has been one of the most successful firms. The managers of Renaissance Technologies use statistical models and math models to predict market movements and use them to trade effectively. The company’s founder, Bill Simons, is a big shareholder and manager.
