Renaissance Clients Pull $4 Billion From Biggest Hedge Fund

Date: Friday, January 11, 2008
Author: Jenny Strasburg and Katherine Burton, Bloomberg

Clients of James Simons's Renaissance Technologies Corp. withdrew $4 billion from the firm's largest hedge fund in the past four months after returns trailed peers.

Redemptions from the Renaissance Institutional Equities Fund, which declined less than 1 percent last year, trimmed assets to between $21 billion and $22 billion, spokeswoman Marcia Horowitz said today in an e-mail. The average stock hedge fund gained 10.4 percent in 2007, according to data compiled by Hedge Fund Research Inc. of Chicago.

The East Setauket, New York-based firm, like other quantitative fund managers, lost money when the computer models it uses to select trades were confounded by volatile stock markets caused by the collapse of subprime mortgages. Stock volatility, as measured by the Chicago Board Options Exchange SPX Volatility Index, almost doubled last year to the highest since early 2003.

When Simons started the equity fund in 2005, he said it could handle as much as $100 billion. Last year, the firm limited inflows to $1.5 billion a month. The recent withdrawals were reported earlier today by Reuters.

The Renaissance institutional fund gained an average of 9.7 percent annually from July 31, 2005, through December 31. That compared with the 9.5 percent gain of the Standard & Poor's 500 Index including dividends reinvested in the same period.

New Operations Chief

Separately, Renaissance has hired James Rowen, the finance chief of hedge-fund firm SAC Capital Advisors LLC since April 2005, as chief operating officer. Rowen, 43, said in a telephone interview today he will move to Renaissance in the next month or so. He's replacing Stephen Daffron, who went to Morgan Stanley. The changes were reported earlier today by Dow Jones Newswires.

Dan Berkowitz, who has overseen accounting and operations for Stamford, Connecticut-based SAC for almost eight years, will replace Rowen, according to spokesman Jonathan Gasthalter. SAC, started in 1992 by Steven Cohen, oversees $15 billion.

SAC's Capital International Fund returned 13 percent last year, beating the 10.4 percent average gain of hedge funds, according to Hedge Fund Research.

To contact the reporter on this story: Jenny Strasburg in New York at jstrasburg@bloomberg.net ; Katherine Burton in New York at kburton@bloomberg.net .