In today's edition, we talk to billionaire quant Igor Tulchinsky about how artificial intelligence i͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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May 25, 2023


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Bradley Saacks
Bradley Saacks

Hi and welcome back to Semafor Business, where we aren’t held hostage by the debt ceiling — yet.

While the ever-growing chance of a U.S. default is on everyone’s mind, we wanted to explore the other big topic du jour before the X date hits: AI.

Our colleagues at Semafor Tech have covered artificial intelligence’s rise from the viewpoint of the biggest companies in the world. But from a finance point of view, you can already see the round edges forming of what former Goldman exec Marty Chavez predicted would be the “next tech bubble” — right as Nvidia nears the trillion-dollar mark, thanks to thanks to soaring demand for its chips from AI companies.

While these AI breakthroughs have been great for novice consumers and next-big-thing-focused C-suites, the hedge funds at the cutting edge have been utilizing the technology for years.

I wanted to hear how these quants — whose fortunes have been made by crunching tons of data and pulling out something useful — regarded the hype and got WorldQuant founder Igor Tulchinsky to give us his take. Read on below for our conversation.

Plus, Vanguard’s pessimism about every asset class, an activist fight over pet food, and I text with Reformation’s CEO about fast fashion.

Nvidia via Reuters

➚ BUY: GPU. Nvidia approached the $1 trillion value status today after it forecast huge second-quarter demand for its graphics processing units. These chips can digest lots of data simultaneously and are the tiny engines of the AI boom. Its share price is within a quarter of a percentage point of beating Amazon’s record for the biggest one-day gain in market value.

➘ SELL: AAA. Fitch put the U.S. government’s pristine credit rating on negative watch ahead of a looming default next week. Meanwhile, a Moody’s senior executive told Politico on Monday he thought a downgrade was unlikely. S&P, the other big ratings agency, never lifted its downgraded AA rating from the 2011 debt standoff.

Semafor Stat

The combined weighting of Apple and Microsoft in the S&P 500 as of this week. That’s the highest concentration for any two stocks in the index since at least 1980, as tech shares are hot again and other sectors like banks and energy have flagged.

Igor Tulchinsky
Semafor/Al Lucca

Igor Tulchinsky is the founder and CEO of WorldQuant, which manages billions within fund manager Millennium.

Q: What’s been the biggest change in quant investing since you started WorldQuant and what does the field look like in 10 years?

A: The explosion of big data, and the development of machine learning and AI technologies. In the next five to 10 years, I see the potential for even more powerful tools that can analyze even more data and make more precise investment decisions.

Q: How has a recent AI or machine-learning breakthrough changed WorldQuant’s processes?

A: We have been looking at how text-to-image technology might help us interpret information in new and revealing ways. According to an Oxford study, the human mind understands images differently to how we interpret text. Using AI to move between visual and text is an interesting way of harnessing algorithms to potentially identify opportunities or shape conclusions that may be more obvious when seen by the human eye.

Q: How quickly will we see these types of breakthroughs now that AI is a focus for the biggest tech companies?

A: The world has become more complex and breakthroughs are happening at a greater pace than ever before. While the past is not guaranteed to repeat, one way to think about this is to look back at the last five years to see what has changed and evolved. Five years ago, there was less computing power, fewer investment signals, less data available to use, and technology was less developed. Take all of those elements, double each of them annually, and that might be what the world will look like in the near future. It’s a hugely exciting time to be an investor.

Q: You have a new book coming out in August about AI changing how we think about risk. What are people missing?

A: The book is my attempt to trace the evolution of predictive technologies in a range of different areas, from medicine to finance. The central idea — which I believe is less understood than it should be — is that it is necessary to grasp the symbiosis between advances in predictive technology and the increasing complexity of the world that technology is attempting to comprehend. Only by pairing radical openness and intuition in the human mind that approaches these new technologies will we truly be able to harness their power.

Q: The firm applies its “quantity is quality” mantra to talent as well. How do you recruit globally in a world that’s become more closed-off?

A: I continue to believe that talent is distributed around the world, but opportunity is not. We continually look to find innovative ways to recruit the best talent. This might be through actively recruiting in areas where we believe there are talented individuals but a scarcity of opportunities: In Vietnam, India, and Hungary, among other regions, or through new talent models that expand our ability to reach individuals in geographies around the world.

For example, we launched WorldQuant BRAIN last year. BRAIN is a web-based simulation platform enabling certain users to become consultants if they build and submit mathematical models, for which they may be compensated.


Vanguard, the country’s second-biggest money manager, cut its 10-year return projections for most investments yesterday, citing “softening in the broader economy.” It got more bearish for 16 of 17 investment buckets.

What We’re Tracking
Reuters/Edgard Garrido
  • Citigroup’s effort to shed its Mexican retail bank, the source of both profits and scandals over the years, hit a snag Wednesday. The bank had planned to sell Banamex to mining conglomerate Grupo Mexico for $7 billion ($5.5 billion less than it paid to buy the business in 2001), but demands by Mexico’s president for protections on jobs, taxes, and Banamex’s valuable art collection derailed the deal.

    Citi will instead spin Banamex off to shareholders, but not until 2025, dragging out a process that has already complicated Citi’s retreat from global retail banking under CEO Jane Fraser. Citi said it will restart stock buybacks, which it had paused for a year as it worked through the Banamex sale, but that did little to reassure investors, who sent shares down 3% yesterday.
  • It’s decision day for Illumina shareholders, who will vote on whether to put any of Carl Icahn’s three nominees on the board. They appear likely to seat at least one, possibly Andrew Teno, a portfolio manager at Icahn’s funds, though Icahn himself was offered a single seat in return for settling in March and rejected it, so he’ll need to do better to justify the fight.

    Icahn tapped into shareholder anger over Illumina’s purchase of gene-tech firm Grail. It did the deal without getting government approvals and antitrust regulators are suing to force an unwind. Results of the vote are expected this afternoon.
One Good Text

The fashion industry — particularly low-priced “fast fashion” options — has been criticized by governments and nonprofits around the world for its carbon footprint. We texted with Hali Borenstein, CEO of women’s clothing brand Reformation, about what can be done. You can read the rest of our conversation here.


A dogfight at Freshpet: Activist hedge fund Jana said yesterday it will nominate four candidates for the pet-food company’s board. The fund, which has been rattling the cage at Freshpet since last fall, details the usual complaints about performance but includes a rare intra-Wall Street rebuke, criticizing Carlyle partner David Basto’s role as a board member at both Freshpet and a competitor owned by the private-equity firm, Compana Pet.

Unsplash/Collins Lesulie
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— Liz and Bradley

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