Hedge Fund Software

Blair Hull In Worth Magazine

Wall Street’s 25 Smartest Players By Ted C. Fishman

That was 1989. Today, Hull’s company is one of the world’s premier market-making firms, setting the bid-ask price on stocks listed on 28 exchanges in nine countries. In some venues, the Hull Group trades nearly a quarter of the entire daily market volume. That is no small feat, considering that other American market-making firms have consistently tried and failed to set up shop overseas. Hull is an aggressive firm in this country, too; its trades account for 8 percent of the volume in U.S. equity-index options in the Standard & Poor’s 500 Stock Index, the Russell 2000, and the Dow Jones Industrial Average. And Hull buys and sells as much as 1 percent of all shares moving on the NYSE.

What distinguishes Hull’s firm from other trading giants, such as Goldman Sachs, is that it does an extremely high volume of small trades that pay small amounts each, while a Goldman does fewer trades for more money. We do about 30,000 trades a day, Hull explains, involving on average about 700 shares each. Speed, of course, is essential in executing Hull’s trades efficiently.

Hull has a staff top-heavy with Ph.D.’s drawn from the sciences. Lately, the firm’s massive computer network has been sorting through patterns in stocks according to genetic algorithms. Our view is that if you have a mouse in your hand you’re too late, Hull says. Indeed, his computers trade stocks faster than the human eye can see them scroll on a screen. The system is designed to predict patterns that will unfold in the market over periods as short as two minutes.

In a business that isn’t normally modest about its technological savvy, Hull and his automated trading shop are the envy of Wall Street’s top firms. So much so that, in July, Goldman Sachs paid $531 million for the whole shebang. They told us they bought us because it would have taken them two years to build a similar system, Hull says, and that by then, we’d be two years ahead.