The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution

by Gregory Zuckerman

He developed a plan to undertake a “newsworthy” trip, convincing two local dealerships to give him and his friends discounts on Lambretta scooters, the top brand at the time, in exchange for the right to film their trip. Simons, Rosenshein, and Mayer set out for South America, a trip they nicknamed “Buenos Aires or Bust.” The young men drove west through Illinois before heading south to Mexico. They traveled on country roads and slept on porches, in abandoned police stations, and in forests, where they set up jungle hammocks with mosquito netting. A family in Mexico City warned the boys about bandits and insisted they buy a gun for protection, teaching the young men to say a crucial phrase in Spanish: “If you move, we’ll kill you.”

When Mercer spoke to the academics about matters unrelated to their project, he often shared a disdain for taxes and a skepticism of climate change, recalls Tim Cooper, a physics professor. Once, Mercer rattled off an array of statistics to demonstrate that nature emits more carbon dioxide than humans. Later, when Cooper checked the data, it was accurate, but Mercer had overlooked the fact that nature absorbs as much carbon dioxide as it emits, which mankind does not. “It sounded like someone had got to him,” Cooper says. “Even a smart guy can get the details right but the big picture wrong.”

For a while, Rebekah and her father backed traditional right-wing groups and causes, such as the Freedom Partners Action Fund, a conservative political action committee founded by billionaire industrialists Charles and David Koch and the Heritage Foundation. Sometimes, Rebekah and Bob would walk through Republican fund-raising events locked arm-in-arm. Rebekah, the more sociable of the pair, did most of the talking, while her father stood silently beside her. The Mercers quickly lost patience with the established organizations, however, and drifted to more controversial causes, giving $1 million to a group running attack ads against a proposed mosque in the vicinity of the World Trade Center’s Ground Zero in lower Manhattan.11 Then, in 2011, the Mercers met conservative firebrand Andrew Breitbart at a conference. Almost immediately, they were intrigued with his far-right news organization, Breitbart News Network, expressing interest in funding its operations. Breitbart introduced the Mercers to his friend, Steve Bannon, a former Goldman Sachs banker, who drew up a term sheet under which the Mercer family purchased nearly 50 percent of Breitbart News for $10 million. In March 2012, Breitbart collapsed on a Los Angeles sidewalk and died of heart failure at the age of forty-three. Bannon and the Mercers convened an emergency meeting in New York to determine the network’s future, and decided that Bannon would become the site’s executive chairman. Over time, the site became pop...

Stunning connection here between quant world and Cambridge Analytica. I had no idea.

Rebekah Mercer assumed a more active role in the new administration. For weeks, she was ensconced in Bannon’s office in Trump Tower, serving as an advisor on the selection of nominees to the Trump cabinet. Mercer successfully lobbied for Senator Jeff Sessions to be chosen as attorney general, pushed hard to prevent Mitt Romney from becoming secretary of state, and played a role in the choice of lawyer Jay Clayton to lead the US Securities and Exchange Commission, even as her influence raised some eyebrows due to her father’s position as co-CEO of one of the nation’s largest hedge funds. Later, the president turned to one of Rebekah Mercer’s longtime associates, Leonard Leo, who ran the conservative Federalist Society, for guidance on nearly all of his judicial nominees. She also made plans to lead an outside group designated to support Trump’s agenda.

Simons and his colleagues generally avoid predicting pure stock moves. It’s not clear any expert or system can reliably predict individual stocks, at least over the long term, or even the direction of financial markets. What Renaissance does is try to anticipate stock moves relative to other stocks, to an index, to a factor model, and to an industry.