The Mystery Behind Jim Simons’ Amazing August Returns

Jim Simons’ Renaissance Institutional Equities Fund gained 5.4% in August and 25.6% YTD, according to Dealbook. This is very mysterious. Renaissance Institutional Equities Fund (RIEF) invests  in stocks with a longer term horizon. How did he manage to beat the market by 10.5 percentage points in August?

RENAISSANCE TECHNOLOGIES

We don’t know which stocks are held by RIEF but we have an idea. The largest positions in Jim Simons’ 13F portfolio are probably held by RIEF. You don’t build a $400 Million position in Apple to make a quick buck in two days. Simons’ had several large holdings in his portfolio at the end of March and he had most of those stocks at the end of June. This implies that these stocks are his longer term holdings. What are these stocks? Simons had more than $250 Million in each of Apple (AAPL), LLY, PG, LO, INTC, and GOOG at the end of June.

When we calculated a weighted average return of Simons’ 13F portfolio we saw that the performance of more than 1500 stocks in Simons’ portfolio was slightly better than the S&P 500 ETF (SPY), -4.9% vs. -5.1%. However smaller positions in Simons’ 13F portfolio most probably held by other funds managed by Simons. That’s why we also calculated the returns for the largest 50 stock positions in Simons’ 13F portfolio. These 50 stocks lost 1.6% in August, 3.5 percentage points better than the SPY.

This means Jim Simons generated one third of his alpha on the long side of his stock portfolio. What is the source of the remaining 7 percentage points of abnormal performance? RIEF is supposed to be investing in equities, so it shouldn’t be deriving its gains from commodities. This means RIEF generated its alpha on the short side (RIEF was probably more short than long). However, we don’t really know how RIEF achieved this amazing performance.  Clearly RIEF didn’t make bearish bets when the stocks were generating positive returns during the first half of the year. Simons managed to beat the market when the market was increasing and he managed to beat the market when the market is decreasing. This is very mysterious.

Individual investors still benefit from imitating his largest stock picks though. He has been investing in conservative stocks and these long positions have been outperforming the market since the beginning of this year.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!