Firms across finance are developing automation technologies to help their business. At Bridgewater Associates, the world’s largest hedge fund, a key project underway involves developing algorithms based on employee data to help automate management decision-making. JPMorgan Chase & Co. is investing in automated technology to streamline systems. One program, called COIN, for Contract Intelligence, interprets commercial-loan agreements that once consumed thousands of hours of work each year by lawyers and loan officers.
Cohen’s efforts come as Point72 suffered along with other multimanager firms by posting a 1 percent gain last year. The performance was a rare setback for the trader, who at SAC averaged returns of about 30 percent annually and posted only one losing year, in 2008. SAC was forced to stop managing money for clients as part of a $1.8 billion insider-trading settlement with the government four years ago.
Cohen’s new firm, Stamford Harbor Capital, is working with an outside marketing company that’s meeting with potential clients to gauge interest in investing in hedge funds that could be started as soon as next year.
Even with the automation efforts, Cohen said at a conference last year it will be some time before technologies such as artificial intelligence displace people. Others agree.
“The risk of automation is that the programs could go haywire,” said Jason Kennedy, founder of London recruitment firm Kennedy Associates, which places portfolio managers and analysts at hedge funds. “When you have one computer playing against another, you could end up with something resembling the flash crash.”
This article was provided by Bloomberg News.