Jim Simon’s Medallion hedge fund was up nearly 10% in March alone and 24% so far this year as global stock markets have pummeled amid the coronavirus pandemic. This according to a recent article in The Wall Street Journal.
While many investors are dealing with an exceedingly difficult year, Renaissance Technologies LLC is “racking up such huge gains that 2020 could be one of the hedge-fund firm’s best years ever,” the article says, noting that the firm’s flagship Medallion fund—which is only open to employees, former employees and “people close to the firm” has risen by 24% for the year through April 14th.
The article points out that the firm’s funds that are open to outside investors “haven’t done nearly as well,” but have managed to rebound of late. The firm, which manages about $75 billion, reportedly “relies on mathematical models rather than intuition and judgment, an approach that can pay off in rough markets.”
The recent gains, the article explains, reflect Medallion’s “distinct approach to investing. Rather than predict the direction of individual stocks or markets, Medallion makes the bulk of its profits betting on the relationships between equities,” a strategy that the article describes as a “more complex version of so-called statistical arbitrage investing than others on Wall Street attempt.”
According to the article, Renaissance’s mathematical predictive models are developed by the firm’s team of 320 theorists, astronomers, scientists, and mathematicians, “are built on more than 10 million lines of computer codes and rely on historic prices and other data. Preset algorithms generate all its trades, eliminating human emotion from the investing decision.”