Funds adopt novel methods to find new tech talent

Graphic novels, coding competitions, mammoth pay packets and even entire university research centres are just some of the tactics hedge funds are turning to as they seek to win an intensifying war for technology talent.

So-called quantitative hedge funds and investment banks have long fought with Silicon Valley for the brightest programmers and data scientists, but traditional asset managers are now throwing themselves into the fray, in a big bet that the future of investing is machine intelligence and Big Data, not human nous and quarterly corporate results.

“The talent war is unprecedented,” said Yin Luo, head of quantitative research at Wolfe Research and a former top strategist at Deutsche Bank. “It’s nearly impossible to find people with experience in both computer science and finance. So it’s all about raw talent.”

To unearth this raw talent, investment groups are trying unorthodox approaches such as coding competitions and freestyle data challenges to unearth hidden gems outside the usual elite universities.

Two Sigma, one of the biggest quant hedge funds, is running a competition on Kaggle, an online platform popular with data scientists, where contestants will have three months to code a trading algorithm based on four gigabytes of financial data provided by the US hedge fund. The winner will soon pocket $100,000.

Ostensibly the aim of the contest is to raise awareness and interest in finance, but the hedge fund also hopes to find some potential hires among Kaggle’s 730,000 user base from across the world.

Instead of a traditional but staid leaflet, potential hires at Two Sigma are given a graphic novel that explains the hedge fund’s approach and benefits, such as a “Monte Carlo Hill Climbing Lunch”, where a Monte Carlo algorithm once a week selects four “Sigmas” to invite. If at least three accept, the lunch is arranged. “As if there were a better way to pick people to eat with,” the graphic novel says.

“While attracting talent is never easy, we find that our culture and people are a differentiator as we speak with potential candidates,” said Scott Grabarski, head of engineering human resources at Two Sigma.

The Kaggle competition follows in the footsteps of WorldQuant, a hedge fund that manages $4.5bn for Izzy Englander’s Millennium Management. It runs a “WorldQuant Challenge” designed to give “curious and strategic-minded individuals the opportunity to learn about quantitative finance, compete with global participants and potentially earn a research consultant position” at the hedge fund.

Underscoring the battle for talent as new players enter the space, WorldQuant late last year sued a former data scientist for breach of contract when he left to join Dan Loeb’s Third Point, alleging that he had been promised a tenfold increase in his salary to $2m. The case was quickly settled out of court.

Several UK hedge funds have led the way in partnering with universities to access the talent pipeline directly. For example, Man Group has financed a centre for “machine learning” — a field of artificial intelligence — at Oxford university, and last year Cambridge university opened the Cantab Capital Institute for Mathematics of Information, funded by Cantab Capital.

For smaller firms the challenges in finding good staff can be particularly intense. “The talent is the hardest part. A lot of my time is simply spent cultivating people,” said Scott Borgerson, the head of CargoMetrics, a Boston-based quant hedge fund. “World class people are very sought-out.”