Search Results


HFA
March 07, 2018  

Galbraith Team Packages Big-Data Processes

A financial-technology startup is pitching fund operators on a big-data program that has been tested by several equity managers.

Equity Data Science of New York is positioning its service as a way for fundamental stock-picking teams to incorporate big-data analysis without reconstituting their core investment processes — or going to the trouble and expense of hiring data scientists and software engineers. EDS writes customized software that supports multiple big-data functions including idea generation, asset valuation, position sizing and risk management. Other fintech firms aim to assist hedge funds in some of those areas, but EDS is pitching its system as the simplest and least-expensive way for equity managers to fully exploit the potential of big data.

EDS has the backing of Steve Galbraith, formerly chief macroeconomic strategist at Maverick Capital and chief investment officer at Morgan Stanley. He helped oversee the formation of Maverick’s quantitative-investing program, dubbed Mavrank, and later developed a prototype of EDS’ software at Herring Creek Capital, a hedge fund firm he founded. Since then, the technology has been adopted by a half-dozen equity managers including Bridger Capital, Sage Asset Management and Senvest.

While Galbraith sits on the board of Equity Data Science and is the firm’s biggest investor, its day-to-day operations are overseen by chief executive Sandeep Varma and president Greg McCall. Varma worked with Galbraith at Herring Creek, and later was a quantitative analyst at Bridger. McCall was a technology portfolio manager at Sage.

To kick-start its marketing effort, EDS hired Don Wood as head of sales about a month ago. He most recently worked as a consultant to ARM Insight, a big-data firm in Portland, Ore. He earlier played a key role at Majestic Research, an alternative-investment data supplier that sold itself to Investment Technology Group in 2010.

As part of its pitch, EDS is highlighting the complexity and expense of developing a big-data program in-house. Compensation for data scientists and software engineers typically runs between $100,000 and $300,000 annually, while purchasing raw data can cost more than $50,000 a year.

The fact that the founders of EDS have experience as portfolio managers could give the firm a leg up in an increasingly crowded field. One of the biggest challenges hedge fund managers face in working with big data is a communications gap between data scientists and investment professionals. Indeed, a recent report from Jefferies’ prime-brokerage group said larger fund-management firms have been hiring “translators” to bridge that gap. McCall and Varma believe EDS is uniquely equipped to help equity managers integrate big data into their investment operations.

Galbraith spent eight years as a partner at Maverick, a Dallas firm led by Lee Ainslie. Prior to joining Maverick in 2004, Galbraith occupied the top investment office at Morgan Stanley for four years.

In addition to EDS, Galbraith runs an investment firm called Kindred Capital, a successor to Herring Creek.