The Master of Robots Left AQR. Now He’s Coming for Wall Street
The man dubbed the world’s top quant has a message for Wall Street firms lavishing millions on machine-learning programs: Most of you are doing it wrong. Robots could save active money managers from doom but the technology is struggling to live up to the disruptive promise, according to Marcos Lopez de Prado.The Spaniard spent years at the storied names of smart-money finance in his bid to shake up investing with self-learning robots.
“I’m a homebody .” Schonfeld also built a growing hedge fund business of a different sort. He picked a close friend from his days at Emory University Schonfeld pivoted into quant trading as it was taking off in 2006. He saw that the faster computer-driven strategies were getting in the way of his traders
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(Bloomberg) -- Steven Schonfeld is a hedge fund billionaire of a different breed.
He’s almost always in a hoodie, drawn from a closet full of them. He shuns the Wall Street crowd. You’ll never see him at a gala in Manhattan or at Davos or Aspen. Mostly he stays home in Old Westbury, New York.
“Between family, golf, gin rummy and friends, that’s my life,” Schonfeld, 60, said in an interview at his office in New York, wearing a black Supreme hoodie, sweatpants and running shoes. “I’m a homebody.”
The AI Doubts Run Deep as Quants Spar Over the Future in London
Addressing about 400 aficionados of quant investing, a seasoned hedge-fund adviser asked if anyone in the crowd had seen practical uses for AI that will be recognized as the real deal over the next decade. “I got my eyes on both of you,” Stuart MacDonald of Bride Valley Partners quipped when just two people raised their hands.He was hosting a panel in London on the future of systematic finance at a time when more and more traders attempt to harness artificial intelligence to power rules-based strategies.
Magnetar Capital began a billion-dollar quantitative effort six years ago to help the .5 billion firm buck a hedge - fund massacre waylaying its peers and EVANSTON, ILL.—Alec Litowitz, founder of one of the country’s largest hedge funds , raised a simple question at the firm’s investment committee
Schonfeld also built a growing hedge fund business of a different sort. He picked a close friend from his days at Emory University and a Goldman Sachs Group Inc. alum to run it, serving as a mentor and having patience with their missteps. That engendered loyalty. In another unusual move, he let his quant traders keep what they cherish most -- intellectual property -- as long as they exclusively manage the firm’s capital.
The culture at Schonfeld Strategic Advisors, where traders strive for consistency rather than big wins and rarely get fired, has produced an enviable record in an industry struggling to outperform the broader market. The multi-manager firm has returned an annual average of roughly 20% over the past six years, almost double that of the S&P 500 Index, putting it in the top echelon of hedge funds.
Inside the New Quant Gold Rush, Bond Traders Get Rich by Coding
Winning in the bond market used to come down to math skills, gut instinct and the patience to wade through a hefty prospectus. That was before the quants came. These days the ability to code is one of the hottest skills out there. The multi-trillion dollar market in company debt is getting wired up by systematic players, and firms are having to pay up for the best talent.Hedge funds are poaching from rivals, sweetening compensation packages and committing more resources, according to recruiters. Credit-quant clients at London firm Selby Jennings are offering annual compensation of up to $400,000 to a Ph.D.
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“Zeke” was the first hedge fund manager I’d ever met in my life. He worked for one of the largest global hedge funds in the world and was moved over a year prior to help launch their Asia operations. But working at a hedge fund can be one of the most exciting and mentally stimulating careers in the world.
“Any amateur can make money,” said Schonfeld, who talks in short, fast bursts. “But how you make it, and how consistent it’s going to be, are what matter.”
In other ways, “Schony,” as his gin pals call him, is just like any other tycoon. He’s worth about $1.3 billion, according to estimates by the Bloomberg Billionaires Index. He spent about $20 million to build a golf course, designed by Rees Jones, next to his Old Westbury estate. On Tuesday, he and his wife Brooke closed on a mega-mansion in Palm Beach, Florida, with the Atlantic Ocean on one side and Intercoastal Waterway on the other, for $111 million.
That plants the couple in the same neighborhood as fellow billionaires Ken Griffin, Paul Tudor Jones and Steve Schwarzman, as well as President Donald Trump, whose Mar-a-Lago resort is less than a mile north.
Schonfeld, who plans to remain a New York resident, rejected the notion that they bought the property to make a splash. He said he hopes the 10-bedroom, 84,626-square-foot estate will lure his three young daughters -- Sadie, Tyler and Hadley -- back home after they go to college.
Inside the New Quant Gold Rush, Bond Traders Get Rich by Coding
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Hedge funds investing in India are not making as much headlines as they did during the previous bull run in 2007-08, but they seem to be making money for investors . Good enough to be ranked among the best-performing hedge funds globally, according to analysts at Singapore’s fund research house
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If Schonfeld has a gift, it’s for numbers.
Employees marvel at his mental math, particularly an ability to calculate probabilities and apply them to almost everything. When the firm was making plans to expand to Asia last year, Schonfeld asked Andrew Fishman, the company’s president, and Chief Investment Officer Ryan Tolkin to develop probabilities of success and upside and downside ratios to four different paths, including an acquisition and building a unit from scratch. They wound up buying Folger Hill Asia, providing the firm with some of its top fundamental equity traders.
“He has always understood the probabilities associated with a particular decision,” said Fishman, who met Schonfeld some 40 years ago at Emory, where they played 3-on-3 tournament basketball together. “He understands there may be losses. But if you have the probabilities in your favor, over time you will be successful.”
Schonfeld’s obsession with numbers began as a kid growing up on Long Island, delivering newspapers and pizzas and admiring his father, who ran his own garment business in New York. At age 9, he memorized all the statistics on baseball cards for the San Francisco Giants and then recalculated the averages in his head to make sure they were right. These days, when he’s courtside at New York Knicks games, he quickly works through changes to the betting spread at halftime based on first-half results -- no easy task.
A Quant, Two Data Guys and a Brevan Howard-Linked AI Hedge Fund
The first question Mike Merritt-Holmes gets asked when pitching his AI strategy is about his resume: which hedge fund did he work for? But Kvasir Technologies Ltd. doesn’t come from an established corner of finance. And neither does the man touting it. Merritt-Holmes founded the machine-learning fund with two fellow computer scientists who made their mark in the world of big data at analytics firm Teradata Corp. The trio subsequently harnessed their engineering acumen to power machine-learning stock investing in developed markets, financed by their personal savings.Before they crossed paths, only one had professional market experience.
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During the interview, he sprang from his chair to show a reporter the updates he gets every 10 minutes on his smartphone with the performance numbers of his 80 trading teams.
“I never miss a 10-minute reading,” said Schonfeld, laughing at his own teenager-like phone habits. He also meets with Fishman and Tolkin twice a week for breakfast and talks with them daily about the business.
Schonfeld started out in 1988 with $440,000 from working as a stockbroker and built a short-term trading business with more than 1,000 employees. His firm was one of the first to use the strategy, taking advantage of volatility with bets that lasted a few hours to a few days. He made $200 million in 2000 at the peak of the dot-com bubble. The market crash in 2001 produced the first of two down years for the firm.
Schonfeld pivoted into quant trading as it was taking off in 2006. He saw that the faster computer-driven strategies were getting in the way of his traders and figured only the best of them would succeed over the long run.
The firm made a mistake as it morphed into a quant shop. Early on it relied too much on a single technology as the core of its data research environment.
“It cost us a certain amount of money,” said Tolkin, who worked on Goldman’s corporate credit trading team before joining Schonfeld in 2013. “We have recognized that there are multiple ways to do things and we have to be more flexible about how we ingest, clean and store data to create an environment that our quants and teams can more successfully gather data from.”
Off-duty officer choked unconscious after defending woman against teens
Two teens, 14 and 16, were arrested for assault, police said.The incident happened Friday outside the Bay Street Mall in Emeryville, about 4 miles northwest of Oakland.
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But the successes have far outweighed the failures.
Schonfeld made another $200 million off volatility during the 2008 financial crisis, and used the dislocation that followed to recruit quants, luring them with capital to start a firm, a data platform to tap and the right to keep their intellectual property.
“Whether you did it on my dime doesn’t matter,” Schonfeld said. “You were the brilliant one creating all this. You should own it.”
The offer helped Schonfeld compete for talent against bigger multi-manager firms that kept their traders’ handiwork. Quantbot Technologies joined Schonfeld in 2009 as one of its first quant teams. The firm extended its agreement to run Schonfeld’s capital through 2027 -- underscoring his ability to retain top talent.
The arrangement also provides protection from regulators who fined Schonfeld in 1999 for trading violations and a decade later for making round-trip trades to hide capital shortfalls. Almost all of Schonfeld’s 22 quant teams are in external firms and hold their own registration with regulators, which means they’re responsible for their own violations. Most of the fundamental equity teams are internal and come under Schonfeld’s beefed-up compliance regime.
Quants are now the backbone of the global business, deploying half of the firm’s $33 billion in gross market value, which includes long and short positions and leverage. Since 2016, when the firm converted to a hedge fund from a family office, it has raised $3 billion in outside capital, including a round this year, as the industry grapples with outflows.
Schonfeld credits his good run to old-school values of being patient and a mentor to staff -- the same qualities that work well in competitive gin.
Decades ago, after he won more money during a two-year stretch than four better players, they asked how he did it. He told them their mistake was to scold their partners for making bad plays.
“I don’t second guess,” he recalled telling them. “They can make the worst play and I say, ‘I would have done the same thing.’ Because of that, they play infinitely better on my team.”
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The biggest hedge fund in the world puts 22 billion against Europe1 Bridgewater, the main hedge fund on the planet, has put a lot on a scenario of declining shares Italian, French and German. Including several CAC40 heavyweights. 2 © Gary Waters / Getty Images
The biggest hedge fund in the world puts 22 billion against the Europet While many stakeholders remain
positive on equities in the euro zone
The first bearish positions were taken last fall. They include the Italian banks, currently encumbered by 200 billion euros of bad loans(loans whose repayment is particularly uncertain), or 12% of the outstanding total of their loans. Bridgewater attacked Intesa Sanpaolo, one of the largest settlements on the peninsula. The hedge also focused on the decline in shares Enel, the Italian leader in utilities, and the local flagship Eni.
Bridgewater has also heavily wagered against several heavyweights in Frankfurt, namely Siemens conglomerate, chemical giant BASF and insurer Allianz, according to Bloomberg data. And the tricolor values have not been forgotten: Bridgewater has relied heavily on the decline in shares Total, Sanofi, Vivendi and Airbus.Bridgewater is known for acting on macroeconomic analyzes. The fund notably noted that the current inflationary pressures were likely to raise long-term interest rates
F5 Networks secures NGNIX software builds as precaution after visit from Russian law enforcement .
F5 Networks says it has taken steps to ensure the security of the master software builds for NGINX, the popular web server technology acquired earlier this year by the Seattle-based networking and security technology company, after Russian law enforcement officials visited the Moscow offices of NGINX on Dec. 12 with a warrant in connection with an intellectual property dispute.© Provided by Geekwire Code created by NGINX co-founder Igor Sysoev is the subject of an intellectual property dispute in Russia. F5 Networks acquired NGINX for $670 million this year.