Porn Algorithms = $$$$$

And not just in the porn industry anymore.
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By Dkroetsch (Own work) [Public domain], via Wikimedia Commons

By Dkroetsch (Own work) [Public domain], via Wikimedia Commons

I am not a mathematician, as the headline of this post amply demonstrates. But Alexey Poyarkov is, and even though he may not know what a collateralized debt obligation is, he’s a precious commodity among the hedge-fund set.

Alexey Poyarkov, a former gold-medal winner of the International Mathematical Olympiad for high-school students, spent most of his early career honing algorithms at technology companies such as Microsoft Corp., where he helped make the Bing search engine smarter at ferreting out pornography.

Last year, a bidding war for Mr. Poyarkov broke out among hedge-fund heavyweights Renaissance Technologies LLC, Citadel LLC and TGS Management Co. When it was over, he went to work at TGS in Irvine, Calif., and could earn as much as $700,000 in his first year, say people familiar with the contract.

And now, he’s sitting by himself in a corner, occasionally gawked at by normals, as he hopes to put the finishing touches on the algorithm that will push the machines to the front of the line.

In just one sign of their power, quantitative hedge funds are now responsible for 27% of all U.S. stock trades by investors, up from 14% in 2013, according to the Tabb Group, a research and consulting firm in New York.

Quants have almost caught up to individual investors, which outnumber quants and collectively have 29% of all stock-trading volume….

“You take tours of offices, and everyone is always pointing out some guy off in a corner, working on his own,” says Alexandru Agachi, chief operating officer at Empiric Capital Ltd., a startup quant hedge fund in London. “They say with pride: ‘Over there is our quant. He’s building signals.’”

And soon, those signals will include that drone that’s following you around, trying to figure out exactly how much you just spent at Fairway.

The next frontier: tapping data from drones and other cutting-edge sources to help understand companies and the economy in real time.

The Quants Run Wall Street Now [WSJ]

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