Vatic hires Old Citadel and DE Shaw Quant Allen Poteshman as CIO

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  • Vatic Investments hired former Citadel and DE Shaw as well as Allen Poteshman as CIO.
  • Poteshman, a former finance professor, will launch a new statistical arbitrage strategy.
  • This is the latest in a series of hires for the high speed systematic trading company.
  • See more stories on the Insider business page.

High-speed quantitative trading firm Vatic Investments is launching a statistical arbitrage effort and hired a former finance professor who worked at Citadel and DE Shaw to lead the charge as chief investment officer.

Allen Poteshman joined Vatic Investments, previously known as Vatic Labs, last week to oversee its global investments but also to develop a new “stat arb” strategy, according to a statement released Wednesday.

Poteshman, most recently CEO of Citadel’s Global Quantitative Securities Group in 2019, will report to Vatic founder and CEO James Chiu.

“The addition of a professional of Allen’s caliber strengthens an already extraordinary team and will allow us to combine our existing strengths in transaction execution with an increased focus on financial research and analysis, creating a unique system that encompasses both short and medium term trading, ”Chiu said in the statement.

Stat arb is a classic quantitative strategy that uses mathematical models, tons of data, and algorithms to take advantage of short-term price or market trading errors, often betting that groups of correlated stocks will revert to historical norms.

Poteshman comes from academia, he studied equity and options markets and taught at the University of Illinois at Urbana-Champaign from 1999 to 2007. He holds doctorates in finance and philosophy as well as a master’s degree in physics. .

In 2007, he left to join DE Shaw’s stat arb equity group, where he spent 11 years before joining Citadel in 2018.

Scott Grummon, who worked as in-house legal counsel at SAC Capital and Billionaire Steve Cohen’s Point72 from 2001 to 2016, also joined Vatic as legal counsel and chief compliance officer, the statement said.

Vatic seeks to develop

Vatic Labs was one of a host of systematic, high-speed proprietary trading companies to emerge as the dust of the financial crisis settled.

Chiu, who worked at Jump Trading from 2008 to 2013, founded Vatic in San Francisco in 2014. Like other high-frequency stores that rely on cutting-edge technology and sophisticated algorithms to achieve trading profits, Vatic has gained a reputation for secrecy, according to industry insiders.

But the company, now based in New York, has expanded its business in recent years, taking outside capital and pursuing strategies that evolve better than high-frequency trading. Vatic had raised $ 44 million from 19 investors in May 2020, according to a Filing of form D with the Securities and Exchange Commission.

The total amount of external funds managed by the company is not clear.

In early 2020, Vatic hired Todd Hohman, a longtime partner of Goldman Sachs who held securities at the bank, including the co-head of Global Systematic Market Creation and Head of Global Quantitative Volume. He was promoted to president and head of risk management earlier this year, Around the same time, the company appointed Dave Handley as CTO.

Prior to Vatic, Handley worked as Head of Research Development at Citadel and as Co-CTO at PDT Partners.

Chris Grabowski, former research engineer also at Citadel and PDT, and Alexy Makarov, former head of quantitative research on options market creation at Two Sigma Securities, also joined the firm, Vatic announced in February.

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