Hedge funds have long been big business. Focused largely on short-term trading of shares at a profit, they increasingly use quantitative data and artificial intelligence to analyse huge volumes of opportunities for investment.
So it was only a matter of time before analysts started to recognise the similarities between financial and sports markets and looked at making the shift.
A couple of early operators tried – and failed – but there’s now some major players getting involved.
Andreas Koukorinis is the founder of Strategem, a sports trading company bringing the traditional hedge fund approach to betting markets. Koukorinis left his job at $3 billion fund Fortress to focus on his new venture. After a slowish start, the business is now profitable, has employed Charles McGarraugh (formally of Goldman Sachs) as CEO, and is aiming to raise GBP25 million in external funds for trading.
“The pitch (to institutional investors) is really straightforward,” says McGarraugh. “Sports lend themselves well to this kind of predictive analytics because it’s a large number of repeated events. And it’s uncorrelated to the rest of the market. And the duration of the asset class is short — things can only diverge from fundamentals for so long because then you’re on to the next one pretty quickly.”