Quant Strategies Continue to Evolve

While the financial crisis of 2007 spurred a lot of questions regarding the role that quantitative investment strategies played in the market’s drop, these strategies continue to evolve, writes Validea CEO John Reese in this week’s Forbes. Reese gives an overview of the evolution of quant investing, which has been used for decades, and the more recent move toward incorporating big data. He points out, however, that there are concerns related to data accuracy and collection methods and emphasizes the fundamental, quantitative-based guru strategies behind Validea’s stock screening models. He offers the following high-scoring picks: LG Display Co. Ltd. (LPL) […]

Big Data Doesn’t Automatically Mean Big Investment Returns

The quant craze in investing doesn’t come without its own set of challenges, says a recent Bloomberg article. As hedge funds delve headlong into the data world to hoist up returns and stay competitive, some may lack the prowess necessary to harvest relevant and accurate numbers, says Matei Zatreanu, who led the charge at $19 billion hedge fund King Street Capital Management. “There are those who realize their industry is changing and their fund isn’t going to exist if they don’t adapt,” he says, adding, “but not many of them know what they are doing, except a few.” The problem […]

Quant Strategy Pros and Cons

Anthony Ledford, chief scientist at U.K.-based investment management firm Man AHL, has mixed feelings regarding the hype around quantitative models and their potential impact on the hedge fund industry. In a recent Bloomberg article, Ledford (who holds a Ph.D. in mathematics) says, “There is some real science here, but it’s not the way it’s been portrayed. Some of it is really marketing, and that’s the bit that annoys me.” The article asserts that the recent move by hedge funds to boost poor performance by using quant strategies has “collided with a sober reality. The technology….requires a heavy commitment of time […]

Stock Picks Based on Quant Strategies

As hedge funds continue to lose clients due to lackluster returns, purely numbers-based investment strategies are gaining popularity. Validea CEO John Reese speaks to the trend in a Nasdaq article published last week. Like those of our guru-based screening models, these strategies are built purely on the underlying fundamentals of a business. The following picks from our quant investment-based strategies of James O’Shaughnessy, Joel Greenblatt and Joseph Piotroski were identified: Thor Industries, Inc. (THO) manufactures and sells recreational vehicles throughout the U.S. and Canada. Persistent growth in earnings-per-share, modest price-sales ratio, and return-on-total capital of 62% earn high scores for […]

Hedge Funds Hungry for Quants

If you’re looking to land a job at a hedge fund, polish up your algorithm building and data mining skills to get to the front of the line. This according to a recent Bloomberg article that explains how hedge funds are hiring quants “like never before in search of an answer to lackluster returns.” King Street Capital Management and Tudor Investment Corp. are among the names anxious to beef up their data analysis and research operations, according to Michael Karp of New York-based recruiting firm Options Group (who has been working in the industry for 25 years). And these jobs […]