In the world of hedge funds, few have achieved as much consistent success and profitable returns as Jim Simon's Renaissance Technologies, the multi-billion fund which unleashed and popularized quant investing, and whose legendary "Medallion" fund, run mostly for fund employees, has been the object of LP lust for years. However, just as notable is that Jim Simons, who Forbes calculated recently is the 50th richest person in the world and who made $1.7 billion last year alone, is not only a prominent Democratic donor, but has been one of the most generous sponsors of Hillary Clinton's presidential campaign.
A recent analysis by the WSJ calculated that, of the $48.5 million donated by hedge funds to the Hillary presidential campaign, Renaissance, and mostly Jim Simons, is the second most generous with $9.5 million, a runner up only to Saban Capital Group with $10 million, followed by such Democrat stalwarts as Paloma Partners ($8.1 million), the Pritzker Group ($7.9 million), and of course Soros ($7.9 million).
To be sure, Simons' appreciation of Clinton has been duly noted in the past, most recently by the Observer:
Mr. Simons’ Rennaissance Technologies has begun pouring millions of dollars into Hillary Clinton‘s campaign, as the hedge fund has donated over $2 million to Ms. Clinton so far this election cycle. Euclidean Capital—also owned by Mr. Simons—has given the Clinton campaign over $7 million in contributions, and the figures are likely to increase as Ms. Clinton slowly transitions her attention from Democratic Primary opponent Bernie Sanders to the presumptive Republican presidential nominee, Donald Trump. Renaissance Technologies was called out by Senator John McCain in 2014 for evading nearly $6 billion in taxes by disguising day-to-day investments as long term investments, and in 2015, Bloomberg ran an article describing how the firm lobbied the U.S. Labor Department for special tax evading privileges.
More recently, Jim Simons spoke to CNBC and said that "if you compare the presidential candidates using the Sharpe ratio, presumptive GOP nominee Donald Trump is 'not a good investment.'"
"Now even if those two candidates had the same expected return — which I doubt — but even if Trump's was as good as Hillary's, his volatility is so enormous that his Sharpe ratio is terrible," Simons said. "So as an investment, Trump is not a good investment, no matter what you might think of his potential return. He's just a wild man," he said.
Simons said that he is a supporter of Clinton, who he said would "make a fine president." When asked what a Trump presidency would mean for the U.S. outlook, Simons said "it wouldn't be good for the country."
Yet while Simons' unabashed support for Clinton, both ideological and financial, and criticism of Trump is very public, what is perhaps less known is that Rentec's Co-CEO, billionaire Robert Mercer, is the man who is now pulling the string behind Donald Trump's entire campaign.
It did not start off that way. Robert Mercer began the presidential campaign by throwing millions, some $13 million to be exact, in financial donations at the person who was Trump's final challenger, Ted Cruz, through a SuperPac run by Kellyanne Conway, Keep the Promise, before the republican's campaign was extinguished by Donald Trump.
Much more importantly, Mercer is the person who secretly instigated last week's bloodless putch inside the Trump campaign, which saw the surprising overthrow of Paul Manafort as Trump's campaign chairman (who subsequently resigned from the campaign due to allegations of undisclosed links to Ukraine lobbying and potential corruption which also implicated the consultancy firm of Tony Podesta), and the appointment of Breitbart's Steve Bannon and Republican pollster Kellyanne Conway. Here are the details:
Mr. Mercer, co-chief executive of the hedge fund Renaissance Technologies, has longstanding ties to both people elevated to top posts in the campaign on Wednesday. He and his daughter, Rebekah, had recommended both Breitbart News chairman Stephen Bannon and Republican pollster Kellyanne Conway, who already worked for the campaign, according to people familiar with the matter. The Mercers met privately with Mr. Trump at a fundraiser last weekend at the East Hampton, N.Y., home of New York Jets owner Woody Johnson, according to a person at the event.
And just like that the man who Rentec's founder, Jim Simons, said "is not a good investment" because his "Sharpe ratio is terrible", has become the investment of RenTec's CEO.
Top Trump donors said the staff reshuffling showed the Mercers’ widening role in the campaign and was a potential setback for Trump campaign chairman Paul Manafort, who had sought to tailor Mr. Trump into a more traditional political figure. The expansion of a billionaire donor’s sway in the campaign follows more than a year of Mr. Trump criticizing major donors on the trail and casting his rivals as “puppets” for accepting the backing of super PACs.
It's not just Bob: it's a family affair:
Doug Deason, whose family was also a top contributor to the Cruz super PAC network, said Ms. Mercer and Ms. Conway worked together closely. “She and Kellyanne had a great working relationship and did a really good job of spending their dollars wisely,” he said. He called Ms. Mercer “very driven and very focused.”
As for Mercer's relationship with Steve Bannon, Trump's new right hand man, it also has a simple trace: money. "Mr. Mercer has also funded Mr. Bannon’s employer Breitbart News, a conservative media outlet that delights in bashing the GOP establishment, and a nonprofit organization, the Government Accountability Institute, that was co-founded by Mr. Bannon, who runs it. Mr. Mercer’s daughter, Rebekah, is listed as a board member for the organization in 2014 tax filings."
Here another curious link emerged: "The Trump campaign recently hired Cambridge Analytica, a data analytics firm owned in part by Mr. Mercer that offers “psychographic” analysis related to the personalities and values of voters.”
And while the emergence of the true puppetmaster behind Trump's campaign is fascinating, we were more curious to dig deeper into the potential influence of Renaissance not on just one, but both candidates. We were not surprised by what we found.
According to OpenSecrets, for the 2015-2016 period, Renaissance is not just generous; it happens to be the most "generous" financial contributor in the world, ranking 1 out of 16,867 tracked contributors.
As a result, in the ranking of top contributors, RenTec is higher than such iconic names as Tom Steyer's Farallon, Elliott Management, and Soros.
Broken down by recipients...
... we find that while the biggest recipients of cash is the Cruz-supporting Keep the Promise SuperPAC, whose effectively only donor was Robert Mercer, the second biggest recipient is the Clinton-supporting Priorities USA SuperPAC, where the top two donors are Jim Simons and George Soros.
But what we find most fascinating is the dramatic ramp up in campaign spending by RenTec not just over the past two elections cycles, but most notably the current one, which is already bigger in one year than all previous contributions in RenTec's entire donation history combined...
... but the republican-democrat split. It's effectively identical.
Why this recent surge in political spending, and why the attempt to fund not just one both both presidential candidates' campaigns? Some answers can be found in recent articles, such as "How RenTec Made More Than $34 Billion In Profits Since 1998: "Fictional Derivatives", "Renaissance Said Probed by Senate Panel on Tax Maneuver" and "Senate Report: Tax Move Helped Hedge Funds Save Billions", however not even the utmost determination to perpetuate a beneficial tax avoidance regime can explain this unprecedented level of campaign funding or, in the case of Mercer, micromanagement and orchestration.
Perhaps the answer is far simpler: having learned that the best way to make virtually unlimited profits in the markets is to be as close to cornering them as possible (or being first, or cheating), RenTec's executive team has applied the same philosophy to the presidential race, because if you are the primary source of strategy and/or cash for both presidential candidates, you are by definition, "perfectly hedged." And, by that same definition, you are about to buy yourself a presidential election.