Two Sigma Investments is a

New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...

-based

hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as s ...

that uses a variety of technological methods, including

artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech r ...

machine learning Machine learning (ML) is a field of inquiry devoted to understanding and building methods that 'learn', that is, methods that leverage data to improve performance on some set of tasks. It is seen as a part of artificial intelligence. Machine ...

, and

distributed computing A distributed system is a system whose components are located on different networked computers, which communicate and coordinate their actions by passing messages to one another from any system. Distributed computing is a field of computer sci ...

, for its trading strategies. The firm is run by

John Overdeck John Albert Overdeck (born 1969) is an American hedge fund manager and philanthropist. Overdeck is the co-founder and co-chairman of Two Sigma Investments, a New York City-based hedge fund that uses a variety of technological methods, including ...

and David Siegel.The World's 100 richest Hedge Funds
''

Bloomberg Markets ''Bloomberg Markets'' is a magazine published six times a year by Bloomberg L.P. as part of Bloomberg News. Aimed at global financial professionals, ''Bloomberg Markets'' publishes articles on the people and issues related to global financial ma ...

History

Two Sigma Investments was founded in 2001 by

, David Siegel and Mark Pickard. Siegel is a computer science Ph.D. from the

Massachusetts Institute of Technology The Massachusetts Institute of Technology (MIT) is a private land-grant research university in Cambridge, Massachusetts. Established in 1861, MIT has played a key role in the development of modern technology and science, and is one of the ...

and held the position of Chief Information Officer for D. E. Shaw & Co. prior to starting Two Sigma. Overdeck is an

International Mathematical Olympiad The International Mathematical Olympiad (IMO) is a mathematical olympiad for pre-university students, and is the oldest of the International Science Olympiads. The first IMO was held in Romania in 1959. It has since been held annually, except i ...

Silver Medalist who subsequently studied mathematics at Stanford University and then rose to the position of Managing Director at D. E. Shaw prior to leaving to co-found Two Sigma. Pickard served as the President of the firm from its inception until his retirement in 2006. According to Two Sigma, the firm's name 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. 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. In February 2014, ''

Forbes ''Forbes'' () is an American business magazine owned by Integrated Whale Media Investments and the Forbes family. Published eight times a year, it features articles on finance, industry, investing, and marketing topics. ''Forbes'' also r ...

'' reported that former Two Sigma employee Kang Gao, aged 29, was prosecuted by the

Manhattan District Attorney The New York County District Attorney, also known as the Manhattan District Attorney, is the elected district attorney for New York County (Manhattan), New York. The office is responsible for the prosecution of violations of New York state laws ...

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, New York. v. Kang Gao, led to Gao receiving 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." In 2016, Two Sigma Investments ranked 11th on Penta's Top 100 Hedge Funds. As of early 2017, Two Sigma had used crowdsourcing options to find trading signals. By March 2017, the fund was running a competition on

Kaggle Kaggle, a subsidiary of Google LLC, is an online community of data scientists and machine learning practitioners. Kaggle allows users to find and publish data sets, explore and build models in a web-based data-science environment, work with oth ...

to code a trading algorithm. The fund managed around $8 billion in November 2011, $23 billion in October 2014, and $32 billion by the end of 2015. , the fund had assets reaching more than $50 billion. In May 2019, the fund had assets reaching $60 billion. This number slightly dropped to $58 billion in October 2020, after Two Sigma saw losses in its risk premia, absolute return, and macro funds.

Technology

At the end of 2016, Two Sigma Investments introduced an

challenge called

Halite Halite (), commonly known as rock salt, is a type of salt, the mineral (natural) form of sodium chloride ( Na Cl). Halite forms isometric crystals. The mineral is typically colorless or white, but may also be light blue, dark blue, purple, p ...

. Halite is a programming game inviting coding enthusiasts to build smart bots whose goal is to gain control of a virtual grid. Due to the success of Halite I, Two Sigma decided to develop a second season of Halite called Halite II. This ran from October 2017 to January 2018, and in this version players competed for control of planets using ships. In October 2022, Two Sigma became a Chainlink node operator to help expand the use cases of blockchain-based hybrid smart contracts.

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 Renaissance Technologies LLC, also known as RenTech or RenTec, is an American hedge fund based in East Setauket, New York, on Long Island, which specializes in systematic trading using quantitative models derived from mathematical and statisti ...

. 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 which focus on private investments, venture capital investments (with a focus on companies operating in the realm of data science), advising institutional clients, and running a high frequency broker-dealer.

References

External links

*
Two Sigma Ventures
{{hedge funds Hedge fund firms in New York City Financial services companies established in 2001