Steve Cohen is revamping his big data operation again at Point72 Asset Management.
The hedge fund named Kirk McKeown to a new position of director of proprietary research to oversee three different groups: Aperio, Data Sourcing and Strategy, and Point of the Spear, according to a person with knowledge of the firm. Point72, which makes long and short equity bets, aims to improve collaboration across the units that deliver trading insights to the firm’s money managers.
Point72, which has been raising money from outside investors after a two-year ban, has struggled along with other hedge funds in turning big data into big profits. Cohen’s firm has been pushing to improve collaboration between scientifically minded quants and managers who rely more on experience to read markets.
In one example of a communication breakdown, Point72 quants built models about New York Times without much input from managers, according to another person familiar with the matter. The models drew criticism from managers for failing to account for the real-world impact of the election of Donald Trump on the newspaper’s circulation, the person said.
“If you leave the data scientists to their own devices they may identify patterns, but without filtering those through the eyes of fund managers those patterns might not actually mean anything,” said Omer Cedar, co-founder of Omega Point, a software company that helps managers use quantitative techniques.
A spokesman for Stamford, Connecticut-based Point72 declined to comment.
Cohen’s firm started Aperio, which is drawn from the Latin word for discover, not long after pleading guilty to securities fraud in 2013 and becoming a family office. Aperio began as a standalone unit, housed in its own office in New York, and was led day-to-day by Michael Recce, a former professor of information systems. At first, the group was responsible for everything from purchasing data and building models to trading its own capital.
But Aperio’s quants struggled to explain their scientific methods to fund managers and produce results fast enough, leading to Recce’s departure after 15 months, Bloomberg reported last year. He was replaced in 2016 by David Loaiza, a Ph.D. in nuclear engineering, who was hired from JPMorgan Chase.
In early 2016, McKeown started Point of the Spear, a translation service designed to bring the quantitative and discretionary sides of the firm closer together. The hedge fund’s approximately 100 managers have different preferences — some like to see the actual data while others would rather work off a model’s analysis, said the person familiar with the firm. Point of the Spear’s job is to help managers obtain, understand and work with the firm’s data products.
“When you take someone with market expertise and pair them with data scientists, it really allows you to get the most out of your data,” Cedar said.
McKeown, who joined the firm in 2012, was previously head of a fundamental research unit that also provides products to managers. Point72 will name a new head for Point of the Spear in the next few months who will report to McKeown, said the person.
As part of the revamp, McKeown also oversees Aperio, whose team of hardcore technologists clean, tag and analyze data sets that number in the hundreds. The data sourcing group is also McKeown’s responsibility.
After some stumbles, Point72’s marriage of science and trading is gaining traction. A few years ago only a handful of managers were embracing quant tools, the person said. Now most of them do.