Giuseppe Paleologo on Quant Investing at Multi-Strat Hedge Funds
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What is the introductory overview of the Odd Lots episode and the guest’s background?
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Hello and welcome to another episode of the Oddlots Podcast. I'm Jill Weisenthal, normally joined by my co-host Tracy Yolloway, but she's on vacation today, so it's just me in this intro. But in today's episode, you will hear a conversation taped live at Bloomberg's Reimagining Information Forum on June twelfth. We spoke with Gappy Paleologo, global head of quantitative research at Baliasny Asset Management. He has a new book out. It's called The Elements of Quantitative Investing. Neither of us have read it because it would go way over our heads because we're not quant so we don't know how to read that stuff. But Gappy is great at explaining all of this stuff in clear English. So we had a great conversation and we hope you enjoy listening to it.
So just to begin, I'm gonna start with a really, really dumb question, possibly, but isn't all investing quant investing nowadays? I mean every investor has access to some form of quantitative stuff. Still
using numbers.
Yeah.
I guess yes. End of answer, yeah. I think so. I mean uh pretty much everybody uses some kind of quantitative overlay, right? But to different degrees. So I uh I have a friend who worked for one of the Tiger Cubs and uh uh they did they refuse to use Sharp. They refused to use logs in uh uh a spreadsheet because they said that they were dangerous. Probably they took uh the log of a negative number and so yeah, no, to different degrees, but yes, there is some quantitative culture seeping through.
Okay, so what defines quantitative investing? How would you differentiate that from, I don't know, value investing, discretionary investing?
Okay, I think that there are several possible answers. So I'm going to go with uh um one answer that I read uh in um My life as a quant, I think. It's a Wiley book. It's a very good book, by the way. And I think Cliff Asnes uh defined uh quantitative investing as Basically investing in a large cross section of assets having a relatively low edge, low expected return in in all of them. And so that's his definition. But it's not quite I think complete enough at this point because you can also be a quantitative investor trading a a relatively narrow cross section of assets. But with high frequency, right? So what matters really is the number of bets in a sense that you are gonna take, right? So I think that probably is if you have a large number of independent bets or quasi-independent bets, this means that you need to be able to scale your method to a large number of independent bets, and this means
That uh you are in some way a quantitative investor.
Speaking of roles and jobs, what do you global head of quantitative research at Beliasny, what do you what's your job? You've been there like about six months. What does the job entail at a at a fund, at a firm like Beliasny?
Okay, global head of quantitative uh research. Okay. So basically uh I am the head of quantitative research for equities and maybe one day in the future I will do, you know, some commodities. or fixed income. But I'm perfectly happy to serve equities uh you know both discretionary and systematic. What we do is I mean my group mostly I mean I am in uh meetings so I don't do any work. So we in a sense provide centralized quantitative services for uh for the firm. So the first backbone thing that we do is you you develop uh factor models. Wherever you can, right? So for equities at different horizons, ideally uh you would would like to develop them for other asset classes, but you know, factor models are the backbone of a lot of quantitative investing nowadays.
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Chapters
4 chapters
1
What is the introductory overview of the Odd Lots episode and the guest’s background?
0:00–7:18
2
Is every type of investing now considered quantitative, and how do professionals define quant investing?
7:18–18:04
3
How does Giuseppe Paleologo describe his role as Global Head of Quantitative Research at Balyasny?
18:04–25:19
4
What is the process for generating and validating new factor ideas in a multi‑strat hedge fund?
25:19–31:45
Speakers
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