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First off, let me start by putting this out there: Team Rebellion doesn’t need your money. As you can plainly see from the photo at left, if this whole hedge fund thing doesn’t work out, the principals can easily find work as a boy band. Having said that, they’re going to keep at this money biz a bit longer and would love to have you along for the ride. Here are the relevant details:
* The Rebels are like a teeny tiny RenTec, sans the Pall Malls.
* They use Artificial Intelligence to invest, being of the mind that computers = smart, man = stupid (“It’s pretty clear that human beings aren’t improving,” said Spencer Greenberg, 27 years old and the brains behind Rebellion’s AI system. “But computers and algorithms are only getting faster and more robust.”)
* You could try to do what they do at home, but you would most likely die.
“No human could do this,” said Michael Kearns, a computer-science professor at the University of Pennsylvania who has used AI to invest at firms such as Lehman Brothers Holdings Inc. “Your head would blow off.”
* They have about $7 Million in AUM but have “struggled to raise money, in part because investors since the credit crisis are dubious of opaque math-based strategies.” (This is where you come in.)
* The founder, Spencer Greenberg, is the grandson of Hank Greenberg, the baseball player, not the old man with the dog.
* The other employees are Alexander Fleiss, Jeremy Newton, and Jonathan Sturges, who are not pulling their weight in the famous relatives department. (Fleiss’s background is in finance and math, Sturges has a master’s in music composition, and Newton is a mathematician who helped design the program.)
* Rebellion’s computer is nicknamed “Star,” which isn’t so great as nicknames go but if they can put you down for $100 million and an 8-year lock-up you could probably have a say in getting renamed T-bone or the Big Guy or something.
* If you’re nervous about putting all your money into the hands of a machine, don’t be. Fleiss was scared too until he learned to let go and love the bomb.
In early 2009, Star started to buy beaten-down stocks such as banks and insurers, which would benefit from a recovery. “He just loaded up on value stocks,” said Mr. Fleiss, referring to the AI program. The fund gained 41% in 2009, more than doubling the Dow’s 19% gain.
The firm’s current portfolio is largely defensive. One of its biggest positions is in gold stocks, according to people familiar with the fund.
The defensive move at first worried Mr. Fleiss, who had grown bullish. But it has proven a smart move so far. “I’ve learned not to question the AI,” he said.
* Similarly, if you’re skittish about trusting your money with a bunch of kids under the age of 28, relax. At least one of the principals can grow a beard: