Type Private company Products Hedge fund Number of employees 900 (2016) Founded 2001 | Industry Investment management AUM $40 billion (2016) Website www.twosigma.com | |
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Headquarters SoHo, Manhattan, New York City, New York, United States Founders John Overdeck, Mark Pickard, David Siegel | ||
Two Sigma Investments LP is a New York City-based hedge fund that uses a variety of technological methods, including artificial intelligence, machine learning, and distributed computing, for its trading strategies. The firm is run by John Overdeck and David Siegel.
Contents
History
Two Sigma Investments was founded in 2001 by John Overdeck, David Siegel and Mark Pickard. The company's main office is in New York City. It also has branch offices in Houston, London, and Hong Kong. According to Two Sigma, the firm's name "Two Sigma" was chosen to reflect the duality of the word sigma. A lower case sigma, σ, designates the volatility of an investment's return over a given benchmark, and an upper case sigma, Σ, 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.
The fund managed around $8 billion in November 2011, $23 billion in October 2014, and $32 billion by the end of 2015.
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. 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.
Fund information
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. 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.
There are a few specialized divisions:
People
Two Sigma Investments was founded in 2001 by John Overdeck, and David Siegel. 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.
Mark Pickard served as the President of the firm from its inception until his retirement in 2006.
Accessing and duplicating confidential information
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. The case is New York. v. Kang Gao. Gao spent 8 months in jail as of October 2014. In February 2015, Gao pleaded guilty to “illegally accessing and duplicating proprietary and confidential information related to the firm’s trading methods.”
Investigation into high-frequency trading practices
In July 2014, Reuters reported that Two Sigma was one of ten companies of interest to the U.S. Securities and Exchange Commission in its investigation of high-frequency trading practices.