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Two Sigma Advisors’ Return, AUM, and Holdings

One of the largest hedge funds in the world, Two Sigma Advisors, was founded by the duo John Overdeck and David Siegel back in 2001, together with Mark Pickard, who retired in the meantime. John Overdeck and David Siegel have been running the firm since its inception and to say they have been doing it very successfully is an understatement. The fund’s regulatory assets under management on a discretionary basis of $48.66 billion speak the most about the duo’s excellent performance throughout the years.

Prior to co-founding Two Sigma Advisors, John Overdeck honed his investment acumen as Managing Director at D.E. Shaw & Co, and as Vice President and technical assistant at Amazon.com, Inc. (NASDAQ:AMZN). Naturally, as a math prodigy who went to the International Mathematical Olympiad when he was only 16 years old and won a silver medal, John Overdeck earned a B.S. in Mathematics (with distinction) and an M.S. in Statistics from Stanford University. He serves as Chair of the Board of Trustees of the National Museum of Mathematics. John Overdeck has been conducting his business very professionally, thanks to which he earned a place on Forbes’ list of 400 wealthiest Americans in 2018.

Two Sigma Advisors’ Return, AUM, and Holdings

Before co-founding Two Sigma Advisors’s David Siegel was a Chief Information Officer at  D.E. Shaw & Co, and he was also employed at Paul Tudor’s Tudor Investment Corp. David Siegel has a Ph.D. in Computer Science from the Massachusetts Institute of Technology, where he ran a study at the Artificial Intelligence Laboratory. Two years ago, both John Overdeck and David Siegel were honored by the Academy of Achievement for being pioneers in technology and investment management.

What differentiates Two Sigma Advisors from many other hedge funds is its use of algorithms and reliance on technology such as artificial intelligence. John Overdeck and David Siegel have been working on creating a computer-guided model-based trading system for more than 40 years. It seems that the fund’s model of operation and investment strategy have been brilliant, as the fund grown to be one of the biggest hedge funds in the US,  and in the world. Let’s take a more detailed look at their success, running through some of its return figures in recent years.

Its two funds from the same Two Sigma’s strategy, Compass Strategy, generated some pretty good returns in 2014. Two Sigma Enhanced Compass fund delivered impressive net returns of 57.55%, and Two Sigma Compass fund disclosed net returns of 25.56% in the same year. Even its funds that use different strategy had a positive performance in 2014 with Two Sigma Absolute Return fund delivering net returns of 10.06%, and Two Sigma Horizon fund returning 14.23%.

In 2016, its Compass fund, which trades futures across markets from commodities to currencies, gained 10.35%, while its flagship Spectrum fund delivered a return of 3%. Then, in the first seven months of 2017, its Compass fund lost 4.4%, only to make a comeback in 2018, being up by 2.96% since January until June.  In the same period, its Absolute Return fund, which trades stocks, gained 2.4%.

Insider Monkey’s flagship strategy identifies the best performing 100 hedge funds at the end of each quarter and invests in their consensus stock picks. This way it is always invested in the best ideas of the best performing hedge funds and is able to generate much higher returns than the market. Since its inception in May 2014, our flagship strategy generated a cumulative return of 96.9%, beating the S&P 500 ETF (SPY) by over 40 percentage points (see the details here).

On the next page you can read about Two Sigma Advisors’ Q3 2018 portfolio changes.

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