Two Sigma Investments

Two Sigma Investments
Industry Investment management
Founded 2001
Headquarters SoHo, Manhattan
New York City, New York, U.S.
Products Hedge fund
AUM $25 billion (2014)
Number of employees
 586
Website www.twosigma.com

Two Sigma Investments is a New York City-based hedge fund that uses a variety of technological methods, including high-frequency trading (HFT), artificial intelligence, machine learning, and distributed computing, for its trading strategies.[1][2] The firm is run by John Overdeck and David Siegel, and manages $25 billion.[3]

History

Two Sigma Investments was founded in 2001 by John Overdeck, David Siegel and Mark Pickard.[2][4] The company's main office is in New York City. It also has branch offices in Houston, London, and Hong Kong.[5] According to Two Sigma, the firm's name "Two Sigma" was chosen to reflect the duality of the word sigma. A lower case sigma designates the volatility of an investment's return over a given benchmark, and sigma with a capital S denotes sum. By adding together the volatilities of individual positions measured against the benchmark, Two Sigma can amplify forecast signals, the company's website says.[6]

The fund size has grown steadily, reaching about $8 billion in November 2011,[7] $20 billion in July 2014,[2] and $23 billion in October 2014.[3]

In October 2013, Two Sigma Private Investments announced that it was joining with Stephen Hannahs to form Wings Capital Partners, a commercial aviation private equity, investment, advisory and financing company.[8] In July 2014, it was announced that Simon Yates, Citigroup's global head of equity derivative sales and trading, left the bank to join Two Sigma.[9]

Fund information

With $25 billion in assets,[3] Two Sigma has been noted in the business press for its unusually high rate of return, comparable to its older and more mature competitors D. E. Shaw & Co. and Renaissance Technologies.[2][10] In October 2014, Two Sigma had raised $3.3 billion for a macro hedge fund in one of the largest new pools of such capital raised since the 2008 financial crisis.[3]

There are a few specialized divisions:

People

Two Sigma Investments was founded in 2001 by John Overdeck, and David Siegel.[2][4] Co-founder David Siegel is a computer science Ph.D. from the Massachusetts Institute of Technology and held the position of Chief Information Officer for D. E. Shaw & Co. prior to starting Two Sigma. The other co-founder, John Overdeck, is an International Mathematical Olympiad Silver Medalist who subsequently studied mathematics and then rose to the position of Managing Director at D. E. Shaw prior to leaving to co-found Two Sigma.[13]

According to its most recent SEC filing, the company employs 586 people, including 407 investment professionals.[2] Mark Pickard served as the President of the firm from its inception until his retirement in 2006.[6]

Controversies

Actions against employees for stealing trade secrets

In February 2014, Forbes reported that former Two Sigma employee Kang Gao, age 29, was prosecuted by the Manhattan District Attorney and is accused of using a remote-access device to view Two Sigma's proprietary trading models and emailing this information to his personal email account, lifting quantitative trading strategies, trading models, a marketing presentation, and a scientific white paper.[14] Gao could face up to four years in jail.[15] A Bloomberg.com article reporting the story noted that while Gao wasn't the first person to be sued by Two Sigma for breaching trade secrecy contracts, he was the first to face criminal charges for it.[16] The case is New York. v. Kang Gao, case number 00640-2014, in the Supreme Court of the State of New York, County of New York. Gao had spent 8 months in jail as of October 2014.[14]

Investigation into high-frequency trading practices

In July 2014, Reuters reported that Two Sigma was one of ten companies being targeted by the U.S. Securities and Exchange Commission in their probe into high-frequency trading practices.[17]

See also

References

  1. ↑ "Two Sigma Investments". Retrieved July 31, 2014.
  2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Vardi, Nathan (July 11, 2014). "Two Sigma Investments Is Having a Great Year And Becoming A Hedge Fund Powerhouse". Forbes. Retrieved July 31, 2014.
  3. ↑ 3.0 3.1 3.2 3.3 3.4 Foxman, Simone (30 October 2014). "Two Sigma Raises $3.3 Billion for New Macro Hedge Fund". Business Week.
  4. ↑ 4.0 4.1 "Two Sigma Investments". Bloomberg BusinessWeek. Retrieved July 31, 2014.
  5. ↑ "Contact". Two Sigma Investments. Retrieved July 31, 2014.
  6. ↑ 6.0 6.1 "About Two Sigma". www.twosigma.com. Two Sigma.
  7. ↑ Copeland, Rob (November 1, 2011). "Two Sigma readies new global equity fund". Retrieved July 31, 2014.
  8. ↑ "Stephen Hannahs, Two Sigma Private Investments Join to Create Wings Capital Partners, a Commercial Aviation Private Equity, Investment, Advisory and Financing Company". Yahoo! Finance. October 7, 2013. Retrieved July 31, 2014.
  9. ↑ Dugan, Kevin (July 2, 2014). "Citi loses equity-derivatives chief to Two Sigma Investments". New York Post. Retrieved July 31, 2014.
  10. ↑ "Two Sigma Investments/Two Sigma Advisers". Retrieved July 31, 2014.
  11. ↑ "Two Sigma Private Investments". Retrieved July 31, 2014.
  12. ↑ "Two Sigma Ventures". Retrieved July 31, 2014.
  13. ↑ "About". Two Sigma Investments. Retrieved July 31, 2014.
  14. ↑ 14.0 14.1 Bishop, Stewart (14 October 2014). "Ex-Two Sigma Analyst Can't Dodge IP Trial, But Bail Is Cut". law360.
  15. ↑ "Analyst Charged With Stealing Quant Trading Models From Major Hedge Fund". Forbes. February 19, 2014. Retrieved July 31, 2014.
  16. ↑ Dolmetsch, Chris; Kary, Tiffany (July 16, 2014). "Wall Street Techs Take Secrets to Next Job at Their Peril". Bloomberg.com. Retrieved July 31, 2014.
  17. ↑ McCrank, John (July 17, 2014). "Exclusive: SEC targets 10 firms in high frequency trading probe - SEC document". Retrieved July 31, 2014.

External links