A couple years back, Paul Tudor Jones delivered a new hedge fund dictum: “No man is better than a machine, and no machine is better than a man with a machine.” He subsequently laid off 15 percent of the humans at his hedge fund and brought on some men whose quanty talents would help transform Paul Tudor Jones from a mere man to a mighty man-with-a-machine. Nine months later, however, Paul Tudor Jones may have another axiom to share with the world: No man with a machine is better than a man with a hedge fund that invests in men with machines:
The billionaire investor has invested in CargoMetrics, a Boston-based fund backed by Google chairman Eric Schmidt that crunches global shipping data and satellite images to find tradeable patterns, and Numerai, a West Coast “crowdsourced” hedge fund backed by former Renaissance Technologies co-founder Howard Morgan, according to people familiar with the matter.
Needless to say, these investments aren't exactly a ringing endorsement of Tudor Investment Corp's own machine learning efforts. It has to be at least slightly discouraging for Tudor's quantitative team to see their quant efforts competing for their boss's attention with a fund whose architects are the faceless hordes.
Of course, it must take time to transform a 37-year-old hedge fund from one that runs on the obsolete neural technology found in human skulls to the binary bits that make up an AI algorithm. But aside from conquering the momentous challenge of emailing employees every time Trump tweets, whatever progress PTJ has made on the technological front isn't yet evident; Tudor’s main fund returned just 0.6 percent in the first couple months of the year.
Then again, at least PTJ isn't hurling his money at another Hamilton ponzi scheme.