Point72 Asset Management, which replaced Steven A. Cohen‘s hedge fund SAC Capital Advisors—the one that got caught on insider trading and paid a $1.2 billion fine—has hired a team of 30 expert so far, build computer models to collect and analyze patterns in publicly available data, Bloomberg reported.
“Data used to come to you in a trickle and today it comes in torrents, ” said Mark Herr, a spokesman for Point72. “The amount of publicly accessible data can now be compared to a fire hose of information. People who can read the signals most accurately and analyze them are the ones who will generate returns.”
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It’s the stuff of science fiction, folks, as Ray Dalio’s Bridgewater Associates and Cohen’s fund are inventing computer-driven investing.
According to Bloomberg, Bridgewater has hired David Ferrucci, the principal investigator who in 2007-2011 led a team of IBM and academic researchers and engineers to the development of the Watson computer system that beat human players on “Jeopardy!.” Ferrucci’s team will create trading algorithms that make predictions based on historical data and statistical probabilities.
According to Bloomberg, these programs will learn and adapt as new market information flows in. Like people used to do.
Back in early February, JBN reported that Steve Cohen was interested in hiring college graduates rather than seasoned professionals with impressive resumes, to work at his $11.1 billion fund. The Cohen fund is all his own money — he’s not allowed near other people’s money for now.
Hedge funds have not done so well in recent years, among other things because there are so many of them. So finding an edge can be crucial. Public data mining might be that edge.
