Hedge Fund Manager Engineering His Own Obsolescence

Muhammed Yesilhark is this close to turning things over to 40 electronic versions of himself.
Author:
Updated:
Original:
By Mandruss (Own work) [CC BY-SA 4.0], via Wikimedia Commons

By Mandruss (Own work) [CC BY-SA 4.0], via Wikimedia Commons

The quantitative backlash continues apace. Now, it’s the quants themselves throwing cold water on the idea that Ray Dalio’s principled robots will soon rule the asset management industry—and with it, the earth.

Winton, a $30.6 billion hedge fund that’s used algorithms to trade for two decades, told clients that people must still make the big decisions. Michael Hintze, who runs another major fund, said computer models can spot market anomalies but rarely provide answers. Jordi Visser, investment chief at a third firm, said humans still have the upper hand when it comes to recognizing patterns. Billionaire bond manager Jeffrey Gundlach said he’s betting people will prevail.

“Despite the immense power of modern computing, it is neither advisable -- nor even possible -- to dispense with humans entirely,” Winton, founded by David Harding, who earned a degree in theoretical physics before going into finance, wrote in its letter to clients this month.

But humans have not yet conquered death, as one quant fund reminds its new hires with the most bizarre benefits plan around. Freezing one’s lifeless corpse, however, in preparation for future reanimation, is only one way to achieve immortality. Muhammed Yesilhark has struck upon another: The Steve Cohen protégé is currently training 40 little Muhammeds to carry on his work. No, unlike his former employer he has not established a nursery in which to raise the Muhammed Yesilharks of the future. No: He’s training robots in his own image.

Since he left his job as hedge-fund manager last year, Muhammed Yesilhark has spent his days teaching computers to pick stocks like he did in his 12-year career….

“They never sleep, do not go to the toilet, have no girlfriends or boyfriends,” says the 37-year-old, who was born and raised in Germany. “I think artificial intelligence and investing is a big opportunity…."

The idea to clone his mind was sparked by his trading days at SAC Global Investors, Cohen’s previous investment firm, where Yesilhark was a partner before moving to Carmignac Gestion. Once his models, which can automate as much as 90 percent of the decision-making, detect a potential trade, Yesilhark makes the final call on whether to buy, sell or reject it. His new analysis is codified again and the machine learns not to repeat the same mistake.

Hedge Fund Bosses Make the Case for Humans [Bloomberg]
This Fund Manager Trains Algos to Copy His Brain [Bloomberg]

Related

Hedge Fund Manager Who Faked His Own Death Has A Few Theories About Other Famous Murders, Real And Imaginary

Remember Samuel Israel III? For those with short memories, SI3 is a former hedge fund manager who faked his own death in June 2008 with the help of his girlfriend, Debra Ryan, who later wrote an article explaining her actions by noting that she and Israel had "a blazing sex life" that was hard to walk away from (Ryan shared colorful anecdotes that included all the times Israel would "[jokingly] sneak up on her, once while wearing sunglasses on his penis"). For Israel's part, he had pretended to kill himself, incorporating a line from M*A*S*H into his fake suicide note, in an attempt to avoid the prison stay that was coming his way, on account of having taken Bayou Group investors for more than $450 million. At the time, he became something of a minor celebrity, whose business card, prominently featuring an egret, was auctioned off on eBay but since ultimately being sentenced to twenty years behind bars we'd heard nary a peep from the guy. Luckily, Andrew Ross Sorkin recently flew down to Butner, North Carolina for a little chat and it's a good thing he did because Israel had a lot he wanted to get off his chest. After offering ARS an "orange Life Saver," discussing his own version of a playoffs beard ("Mr. Israel...was wearing a tan prison uniform with his hair grown out, a mass of silver and brown curls sprouting from the sides of his bald head. 'I’m never going to cut it until I get out,' he exclaimed"), and talking Ponzi schemes, SI3 got down to the real matter at hand. About halfway through, the interview turned bizarre when Mr. Israel, on the verge of crying, announced: “I took a man’s life. I shot him twice.” I asked for more details. The story is recounted in “Octopus,” but the author, Mr. Lawson, doesn’t appear to believe it. In the supposed slaying, Mr. Israel describes himself defending a known con man, Robert Booth Nichols, who claimed to have once worked for the Central Intelligence Agency and has since died. Mr. Nichols was undertaking a secret trade at a German bank and was ambushed outside by a cockeyed “Middle Eastern guy.” Mr. Israel says he shot the ambusher in the hip and then in the head. He looked at me, shaking, and said, “I’ve seen someone with their head blown off maybe two feet back — as close as I am to you.” Mr. Israel recognized my skepticism. When I asked him what happened to the body, he said, “Bob made a couple of calls.” Again, I looked at him quizzically. “These people can do anything. They can get rid of a body,” he said. “Come on,” he added, looking at me as if I didn’t understand. “They can kill presidents.” I wasn’t sure what he was talking about. “The J.F.K. thing,” he said. He went on to tell me that he had videotapes of Kennedy’s assassination and that one was stolen by the F.B.I. “I know it makes me look like a crackpot,” he said. “But I know it’s real. Look into my eyes — I don’t care if people think I’m crazy.” Egrets. A Con Man Who Lives Between Truth And Fiction [Dealbook]

UK Hedge Fund Manager's Chickens To Maintain The Lifestyle They've Grown Accustomed To In 2013

What motivates a hedge fund manager to continue busting his ass to churn out profits year after year, once he's already amassed a fortune most people can't even fathom, when he could easily pack it all in and live more than comfortably without ever working another day? For some, it's the thrill. For others, it's the trophy's wife's shoe habit. For Crispin Odey, it's the chickens. The Odey Asset Management founder (and sausage brand ambassador)'s got a mess of high-maintenance ones and earlier this year, had architects draft blueprints of a "Palladian-style" mansion he intended to build them (seen at left), replete with a grey zinc roof, "pediments, cornice, architrave, and frieze in English oak," and columns "hewn from the finest grey Forest of Dean standstone." After finishing 2011 down 20.3%, things were no doubt more than a little tense over in Herefordshire, where questions of whether or not construction would have to be halted, or if they'd have to make the switch to [whispers] generic-brand feed. Certainly a moment of panic swept over Odey each day when he returned home, wondering as he turned the knob if he'd be entering an empty house, the chickens gone and a note explaining they couldn't do this anymore on the fridge. Ran off with the general contractor because what was the point of shacking up with a money manger if the money wasn't there? Luckily for all parties involved, it won't have to come to that; according to Bloomberg Markets' annual ranking of the top performing hedge funds, performing under pressure is one of Odey's specialities.