Man Numeric Hackathon 2018

Man Numeric’s Hackathon took place in November 2018.

24 hours. Twice a year.
All the resources you need. Working on whatever you like.
Everything is a nail. Here is your hammer … Man Numeric’s Hackathon.

31 JANUARY 2019

It starts with croissants at 6 a.m. and ends with an award ceremony. The middle (roughly) 24 hours is all about teamwork, encouraging a love of learning and self-improvement and satisfying an intellectual curiosity – It’s the Man Numeric Hackathon, a semi-annual tradition at the firm since 2014.

Common across the tech space, Hackathons represent an opportunity to break away from day-to-day routine, and enjoy time spent collaborating with colleagues. At Man Numeric, the Hackathon encourages staff to exclusively work on complex, interesting problems around both investing (which could ultimately make it into an investment portfolio) and the wider business.

“Originally a Silicon Valley concept, the Hackathon is relatively refreshing to the asset management industry. It highlights Man Numeric as a technologically driven asset manager and also speaks volume about our open and innovative culture,” says Ed Fang, deputy director of research at Man Numeric.

The aim of the Hackathon is to foster a spirit of innovation and creativity in an environment which is free from the constraints of day-to-day responsibilities.

The rationale behind the Hackathon is the 80/20 principle: by working solely on one project, teams are able to complete much of the initial work and establish whether a project is likely to be feasible or not, even if the last 20% of the work takes months to complete. This allows Man Numeric to be efficient: instead of taking months to adequately test projects, the Hackathon allows a broad range of ideas to be tested quickly.

Indeed, ‘failed’ projects are as useful as ‘successful’ ones – establishing that an idea is not useful for investing helps the team to filter out noise and refine their analysis. “It is like if you plant 1,000 flowers – at least some of them will bloom,” says Shanta Puchtler, CEO of Man Numeric. “You need a lot of ideas to create one good idea – you need to fail to succeed.”

This also provides an opportunity to take advantage of the intellectual capital of Man Numeric’s employees, with many using the Hackathon to further explore previous research interests.

The Hackathon format is fairly flexible. Participants have complete freedom in a 24-hour period to work on their projects, presenting the results to the rest of the team at the end. Winners are selected across multiple categories. The best projects then receive continued support to take them from a ‘good idea’ to potentially becoming an integral part of the investment process.

A big part of the culture of the Hackathon is spending time with colleagues. For this reason, participants can enjoy lunch and dinner together, in the hope that sharing ideas will stimulate the day’s research. Research topics can be diverse; in 2018, projects ranges from credit modelling migration and an analysis of the ‘age’ effect of alpha to how to improve bank modelling and how to identify ESG factor importance using earnings call transcripts.

Previous Hackathons have led to impressive results, in our view. Man Numeric Liquid Private Equity Strategy had its genesis in research during the Spring 2016 hackathon. The strategy seeks to mimic the key risk exposures and overall return profile of buyout funds by investing in public equities that have similar profitability, growth, and other fundamental characteristics as those typically exhibited by companies in buyout portfolios. By using publicly traded stocks, investors are able to access the strategy at a much lower fee and without the inherent illiquidity of private equity investments.

From the Fall 2017 Hackathon, a project on short volume data – used to track how many investors are shorting particular stocks – is now being traded live. The program uses this data to understand how investor sentiment and positioning affect stock movements, seeking to generate alpha from the improved clarity as part of its Informed Investor model.

A Spring 2018 Hackathon project on natural language processing is currently being used to improve Man Numeric’s sentiment analysis. Initially, this requires human researchers to identify a broad range of financial news articles as positive, neutral or negative. The results are used to ‘teach’ the program to recognise sentiment in a sophisticated way which makes allowances for financial jargon. A classic example would be the word ‘rich’. In many scenarios, ‘rich’ may be an indicator of positive sentiment. In the bond market however, ‘rich’ would imply that a bond is trading at a premium, which might not necessarily make for the best investment. By developing programs which can apply natural language processing to take account of such subtle distinctions, we hope to get a clearer picture of how sentiment can affect security prices.

At Man Numeric, the Hackathon is paramount to our culture, especially as part of a wider drive to appeal to leading tech and quantitative talent. As we compete for talent across the wider tech space, providing an environment which encourages innovation and is engaged with cutting-edge research is paramount.

“Hackathon is something that anyone at the firm can get excited about – we have everyone from senior leadership with 15+ year tenures to interns who participate,” says quantitative researcher Nina Gnedin, who is responsible for organising the Hackathon at Man Numeric. “Everyone’s projects and ideas are listened to equally which, for prospective and new joiners, means they could have a substantial impact right off the bat.”

Indeed, in the Fall 2018 Hackathon, we were delighted that 10 of the 42 Hackathon participants were new hires who had joined the firm less than a year ago, and had not been involved in a Hackathon previously.

“I had heard about the Hackathon during my interview process, but underestimated the breadth of projects,” says Owen Haiber, who joined Man Numeric in July 2018. “I found it exciting to see conventionally technical projects presented alongside alpha-seeking projects less common in typical Hackathons. Overall, I learned a lot, and found it invigorating to see so many people across the firm had come up with different projects which they found exciting.”

“While the Hackathon aims to provide an opportunity to discover the next big research idea, it is also about celebrating the collaboration, teamwork and process of innovation that sometimes is taken for granted,” says Puchtler. “And if a project or idea ends up in the portfolio, then that’s just the cherry on top.”

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