Podcast
Odds on Open
Hosted by Ethan Kho · EN
Conversations with leading thinkers on trading and investing.
Hosted by Ethan Kho.
Produced by Patrick Kho.
11episodes
Episodes
Newest firstAll episodes
Ex-WorldQuant Head of Data Strategy: Quants “Don’t Care About the Stock Market”
6d ago01:04:17Tap to summarizeIn this episode of Odds on Open, we deconstruct the evolution of alternative data and alpha generation with Matt Ober, former Head of Data Strategy at WorldQuant and Chief Data Scientist at Third Point. We dive deep into the institutional framework required to scale systematic trading strategies, the cultural friction of implementing quantamental processes within long-short equity pods, and the specific mechanisms used by portfolio managers to extract a variant view from massive datasets. From the factory-floor automation of PhD-led quant shops to the high-stakes risk management of activist fundamental funds, Matt reveals how market microstructure and data-driven edge define success in liquid markets.Explore the shift toward the "degenerate economy" and the rising institutional utility of prediction markets like Kalshi and Polymarket for hedging structured KPIs. We analyze the future of decision intelligence through the lens of LLMs and MCPs (Model Context Protocol), discussing how traders, analysts, and allocators can maintain differentiation in a regime of rapid alpha erosion. Whether you are optimizing portfolio construction, refining factor exposure, or seeking a competitive advantage in venture capital, this conversation provides a masterclass in leveraging social networks and information symmetry to secure uncorrelated returns.00:00 Intro01:18 The WorldQuant thesis: Mining alternative data for systematic alpha05:06 Integrating finance expertise into PhD-heavy quant factory pipelines07:00 Scaling the quant factory: Automation and the researcher pipeline09:46 Monitoring dataset performance: Risk controls and alpha decay11:07 A message from ONYX16:38 Quantamental shifts: Transitioning data strategy to fundamental funds22:29 Institutionalizing "Old Guard" firms via top-down data buy-in26:38 Networking for quants: Comparing Tulchinsky and Loeb’s sources of edge32:44 The Degenerate Economy: Prediction markets and the volatility of attention39:42 Non-consensus career bets: Why selling beta is a stickier strategy45:01 Sourcing venture alpha: Identifying exceptional founders and GTM wedges52:30 Institutionalizing prediction markets via structured KPI hedging01:00:39 How MCPs and LLMs democratize decision intelligence01:03:08 The single source of edge: Leveraging social network information
Transcribe →The Secret to Uncorrelated Alpha in Crypto - Leigh Drogen on Starkiller Capital’s Sharpe Ratio of 4
1w ago01:09:20Tap to summarizeApply to Onyx’s Junior Tech Graduate Scheme here: https://verichain.io/apply/0aa1debe-ac6c-452f-9421-da6cbf4a3e8cLeigh Drogen, CIO of Starkiller Capital, joins the podcast to dissect the mechanics of a market neutral DeFi strategy currently operating at a 4 Sharpe ratio. We move past surface-level crypto narratives to analyze the quantitative scoring of protocol risk, code provenance, and the identification of incentivized spreads in carry trades. Drogen outlines a rigorous framework for position sizing based on a 1% max-loss rule and explains how Starkiller modulates risk across market regimes to extract uncorrelated alpha while avoiding the pitfalls of unsustainable yield and "fuckery risk" in liquid digital asset markets.The discussion shifts to the persistent alpha of cross-sectional momentum and why Starkiller views block space as a commoditized asset, drawing parallels to the fiber optic glut of the late 90s. From the market structure of token unlock schedules to the evolution of prediction markets like Estimize and Polymarket, we explore the intersection of regulatory arbitrage and table selection. This episode provides institutional-grade insights into portfolio construction, trend following, and the risk management frameworks required to navigate the liquidity and volatility of the modern crypto regime.00:00 Intro01:09 Mechanics of a 4 Sharpe market neutral DeFi strategy03:24 Quantifying protocol risk and code provenance06:40 Case study: Exploiting incentivized spreads in carry trades09:51 A message from ONYX10:53 Three primary sources of alpha in liquid crypto markets14:28 Capacity constraints and institutional yield compression18:54 Position sizing via the 1% max loss rule21:38 Pro-cyclical returns and the risk modulation framework26:44 Compounding capital through trend following and cross-sectional momentum33:35 Why momentum is the only persistent behavioral alpha38:52 Why block space is worthless: The fiber optic analogy42:30 Mitigating "fuckery risk" and vampire attacks in shorts48:39 Extracting alpha from token unlock schedules and market structure51:20 Lessons from building Estimize and the SEC/ForceRank fight55:00 The Polymarket origin story: Arbitraging regulatory hurdles01:01:45 Career risk premia and the value of "eating shit"01:05:34 Table selection: Positioning your career on the right macro curve
Transcribe →“Market Crashes Are Good for My Strategy” - One-Man Hedge Fund PM George Livadas
3w ago01:07:45Tap to summarizeApply here: https://onyxcapitalgroup.com/uni-studentsGeorge Livadas, Portfolio Manager and founder of Peregrine Capital, joins the show to break down the mechanics of running a concentrated, defensive long/short strategy as a solo PM. We explore how George generates alpha by systematically avoiding "hedge fund hotel" crowding, focusing instead on microstructure edges within niche sectors like non-bank financials and packaging to maintain a variant view. George details his portfolio construction framework—balancing core quality compounders with tactical value—and explains the math behind delivering equity-like returns while maintaining a beta-adjusted net exposure of approximately 35%.The conversation shifts to the evolving market regime, specifically how the dominance of multi-manager pods has created liquidity opportunities for patient, independent traders to exploit short-term data noise. George shares his technical survival guide for short selling, from managing volatility in "fraud and fad" names to recalibrating his process following the 2021 SPAC boom. We conclude with a deep dive into macro risk management, discussing how to insulate a portfolio against geopolitical tail risks and the psychological discipline required to develop a professional PM skill set without a traditional institutional pedigree.How do you stay independent in a market dominated by pods?00:00 Intro01:18 Selection criteria and sizing for defensive longs06:04 Sponsor break: Onyx Capital Group anniversary event06:42 Portfolio construction: Balancing quality and value factors09:13 How the SPAC boom changed short-side portfolio construction13:42 Why nimbleness and independent thinking generate alpha20:06 Capitalizing on the short-termism of multi-manager pods28:18 Managing macro tail risks without being wrong-footed38:26 Why defensive strategies offer an "inverse pod" return stream42:04 How to develop a professional PM skill set54:37 Circle of competence: Identifying disastrous longs and shorts
Transcribe →“If it is easy and obvious, there is no edge in it” - TD Quant Matt Schrager
4w ago01:15:54Tap to summarizeIn this episode of Odds on Open, TD Quant Matt Schrager discusses the microstructure of municipal bond market making and the technical challenges of extracting alpha from illiquid fixed income instruments. We analyze the shift from low-latency HFT frameworks to the probabilistic modeling and statistical pricing required for securities with fragmented liquidity. Matt details the mechanics of systematic inventory management, risk-adjusted P&L optimization, and the cultural integration of elite proprietary trading teams within institutional balance sheets.Schrager outlines a variant view on finding edge in "ugly," inefficient markets, focusing on the structural opacity of private credit and the electronification of commodities. The discussion covers the evolution of market efficiency, the role of LLMs in credit due diligence, and recruiting strategies for resilient quantitative talent. This episode provides actionable insights for hedge fund analysts, quants, and PMs on the relentless process required to maintain a competitive advantage in evolving market regimes.00:00 Intro00:01:29 Announcing OOO's Newest Sponsor00:02:20 Liquidity and latency differentials in the municipal bond market00:06:37 Probabilistic modeling and statistical pricing for low-frequency instruments00:10:50 Adapting HFT simulation and backtesting to illiquid fixed income00:20:33 Systematic inventory management and risk-adjusted P&L optimization00:27:36 Transitioning proprietary trading culture into a global bank infrastructure00:34:10 Scaling electronic market making into commodities and investment-grade credit00:41:24 Identifying edge in gnarly and inefficient corners of the market00:45:23 Structural opacity and the liquidity evolution in private credit00:56:21 Why elite trading organizations prioritize relentless process over magic01:04:16 Recruiting for resilience and the velocity of fundamental improvement01:11:02 How AI-native skillsets redefine talent in liquid market regimes
Transcribe →Ex-Tudor Quant PM: “There Hasn't Been a New Idea in Trading for 15 Years”
Apr 3001:15:58Tap to summarizeIn this episode of Odds on Open, we go deep into the mechanics of edge, credibility, and the structural evolution of the hedge fund industry. Host Ethan sits down with Tom, a veteran Quant PM formerly of Tudor Investment Corp and Moore Capital, to deconstruct what separates the top-tier "pod shops" from the bottom 40% of funds that fail to preserve capital.Tom challenges the common perception of market randomness, arguing instead for a deterministic view of market structure where alpha is captured by modeling participant incentives rather than just price action. We discuss the "Unified Field Theory of Finance," the operational reality of running a billion-dollar book, and why the most dangerous trap for a PM is the "gamma trap"—trading steady returns for catastrophic tail risk.00:00 Intro01:18 Building institutional credibility for early-stage managers03:01 The Pareto distribution of hedge fund returns04:25 Applying the Unified Field Theory of Finance to fair value08:14 Trading against human incentives in a deterministic market13:54 Why allocators don’t steal alpha from prospective PMs18:26 Organizational advantages and risk management in pod shops25:16 Evaluating career edge in quantitative finance for 202630:48 Paul Tudor Jones and the art of game selection33:42 Analyzing the economic viability of starting a new fund35:16 Identifying common retail pitfalls: Mean reversion and arbitrage38:55 Why there hasn't been a new trading idea in 15 years43:22 Case study: Building NLP systems and managing strategy decay50:33 Managing tail risk: Physics vs. deterministic financial distributions55:33 Identifying the gamma trap in short-volatility strategies59:10 Career pathing for PMs after a fund blow-up1:07:53 SBF and FTX: Credibility vs. the "Founder-Genius" archetype1:13:44 Establishing proof-of-concept through audited multi-year returns
Transcribe →“Concentrated Strategies Will Do Extremely Well” - Sean Emory on Outperforming the Index
Apr 2301:09:32Tap to summarizeSean Emory of Avery discusses the evolution of edge in liquid markets, specifically how to leverage alternative data—from App Store analytics to digital exhaust—to identify fundamental inflection points before they are reflected in the price. We dive deep into Sean’s underwriting process, exploring how institutional investors can use granular data sets to track thesis confirmation and identify a margin of safety in real-time. This conversation provides a technical breakdown of how to separate signal from noise in a market regime increasingly dominated by ultra-short-term microstructure and passive flows.Sean also breaks down his approach to portfolio construction, comparing the risk-return profiles of highly concentrated strategies versus diversified books. He explains why his firm prioritizes "the Six Ms" over standard volatility metrics to mitigate the risk of permanent capital impairment, offering a variant view on traditional risk management. The discussion concludes with the operational realities of the active ETF landscape, the impact of generative AI on market efficiency, and the psychological discipline required to maintain alpha when storytelling and euphoria distort traditional valuation frameworks.
Transcribe →“It’s the Dumbest Market in the World” - Quant Trader Scott Phillips on Edge in Crypto
Apr 1601:35:13Tap to summarizeIn this episode of Odds on Open, quant trader Scott Phillips joins the pod to break down why crypto remains "the dumbest market in the world" and a goldmine for systematic edge. We dive deep into table selection and why the lack of institutional competition allows for Sharpe ratios exceeding 2.0 through basic trend following and momentum strategies. Phillips explains the mechanics of market inefficiencies, from the reflexivity of on-chain liquidity to the alpha found in tracking price-insensitive buyers and VC exit liquidity. For hedge fund analysts and quants, this is a masterclass in identifying liquid market anomalies that TradFi has long since arbitraged away.The conversation shifts to the technicalities of portfolio construction and risk management within the "dark forest" of DeFi. Scott details his transition from click trading to launching Hyper Trend, a tokenized on-chain hedge fund executing mid-frequency crypto strategies on Hyperliquid. We explore the microstructure of funding rates, the carry trade, and how to model counterparty risk when dealing with exchange-specific incentives and North Korean state actors. Whether you are a PM focused on factor analysis or a trader looking to exploit mean reversion in altcoins, this episode provides a raw, credibility-forward look at capturing beta-neutral returns in the world’s most volatile regime.00:43 Table selection and the math of competitive alpha06:21 Why basic trend following yields outsized Sharpe in crypto08:49 Why market inefficiency persists despite institutional inflows14:58 Price insensitive buyers: Cults, VCs, and North Korean hackers17:17 Factor analysis and the size-decay effect in shitcoins25:40 The structural edge in mid-frequency crypto strategies32:43 Tokenized DeFi vaults and on-chain hedge fund governance40:43 Designing a robust portfolio: Equal weighting vs. MVO44:21 Sourcing alpha from ghost chains and VC exit liquidity49:58 Exploiting market maker contracts and post-listing drift53:55 Operational alpha: Managing margin and manipulated funding rates01:01:13 Shifting from quant to CEO: Identity fluidity and mastery01:11:28 How to bridge the mentorship gap with elite traders01:22:38 Building network triads: The secret to compounding social capital01:29:23 Why 10x goals require total identity transformation
Transcribe →Now Is the Best Time to Become a Junior Analyst - Ex-Citadel and D. E. Shaw PM Brett Caughran
Apr 901:01:29Tap to summarizeGet 10% off on Fundamental Edge: https://www.fundamentedge.com/odds-on-open-podcastIn this episode of Odds on Open, Ethan Kho sits down with Brett Caughran, founder of Fundamental Edge and a former Portfolio Manager at elite Tiger Cub and Multi-Manager (MM) firms.As generative AI and agentic workflows commoditize the "desktop research" layer of investing, the bar for generating idiosyncratic alpha has never been higher. Brett breaks down the specific frameworks—including ETIC (Everything There Is To Know) and the Focus 5—that top-tier pods use to identify mispriced securities and isolate key drivers before they are priced in by the market.We dive deep into the market microstructure shifts caused by the rise of indexers and factor-based quants, explaining why increased volatility is a gift for fundamental investors with the stomach for Bayesian updating. Brett also provides a roadmap for the "New Junior Analyst," shifting the focus from manual model-cranking to high-leverage primary research and AI orchestration.00:00 Intro01:29 Frameworks for developing a differentiated variant perception05:16 Financial drivers vs. narrative cycles: The Focus 5 framework08:29 Analyzing the stock vs. business: Bayesian updating in public markets12:52 AI as an intellectual power tool vs. consensus "alpha slop"17:21 Accelerating the hunch-to-hypothesis pipeline with AI sniff tests21:52 The evolution of junior analysts: From data entry to primary research28:46 Why market microstructure and behavioral alpha prevent index efficiency34:48 New meta-skills: Debugging models and the expectations gap muscle38:44 Training junior analysts: Earning the right to use power tools44:34 High-value workflows: CEO credibility analysis and guidance tracking48:28 LLMs as orchestration tools for human primary research54:55 Teachable scientific process vs. revealed investment judgment57:54 Common threads across Multi-Managers, Single Managers, and Tiger Cubs59:49 Curiosity as a meta-skill and the art of system thinking
Transcribe →"Positions Can Be LESS Risky at Higher Prices" - Derek Pilecki on Finding Edge in Financials
Apr 200:55:44Tap to summarizeIn this episode of Odds on Open, Ethan Kho sits down with Derek Pilecki, founder of Gator Capital Management, to deconstruct his 20%+ annualized track record in the financial sector. While many generalist PMs view financials as a "sleepy backwater" or overly complex, Derek explains how he extracts alpha from regional banks, brokerages, and insurance companies by identifying fundamental business changes before they are reflected in the tape.The conversation moves from the microstructure of bank underwriting in a post-Dodd-Frank regime to the practicalities of portfolio construction, including why Derek has expanded his concentration from 25 to 40 names and his strict discipline against "averaging down" on losers. We also dive into the private credit narrative, the actual risk of systemic leverage in non-bank financials, and how generative AI is shifting the valuation multiples of moaty info-service businesses like Morningstar and FactSet.00:00 Intro01:06 Derek's +21% annualized return track record02:50 Fundamental business change vs market noise in Robinhood05:25 Portfolio construction: Concentration limits and adding to winners09:09 Sourcing alpha and identifying three-year doubles in financials12:44 Developing edge through repetition and management team cycles14:16 Why the post-GFC regime fundamentally changed bank underwriting17:07 Assessing tail risk and leverage in the private credit market21:23 AI-driven market dispersion and identifying moaty businesses24:11 Why shareholder base turnover matters for timing broken charts25:57 AI disruption vs trust-based moats in financial services29:37 Integrating AI into fundamental research and SEC filing analysis32:31 Scaling regional bank positions and managing liquidity constraints35:39 Risk management: Permanent capital loss vs mark-to-market volatility37:12 Capacity constraints: Optimizing for returns over AUM scale44:14 Behavioral edge and avoiding the "degree of difficulty" trap50:39 Career risk and the reality of active money management54:18 Breaking into the industry via public stock write-ups
Transcribe →How Billionaire Hedge Fund Managers Are Using Generative AI to Invest
Mar 2701:15:02Tap to summarizeIn this episode of Odds on Open, we analyze the technical architecture of the data science layer within fundamental hedge funds. Guest Matei Zatreanu, founder of System2, discusses the tension between generative AI and the search for outlier-driven alpha. We move beyond the hype of LLMs to discuss the practicalities of expert network automation, the causal mapping of second-order macro effects, and why the most successful PMs treat their investment process as a craft rather than a business operation. The conversation also explores the structural shift from single-manager funds to multi-manager platforms and the specific incentive alignment strategies used to retain quant talent in high-stakes environments.(00:00:00) Intro(00:00:53) Talent constraints and outlier detection in the data science layer(00:05:38) LLM customization: Differentiated alpha vs. the consensus echo chamber(00:10:18) Automating the mosaic: AI interview agents and qualitative data synthesis(00:20:33) Mapping causal relationships and second-order macro effects via graphs(00:26:33) Curiosity as the ultimate constraint for information-rich investors(00:31:43) Multi-manager platforms vs. the rise of independent single managers(00:37:58) Solving incentive alignment and analyst retention via internal fund-of-funds(00:44:03) Managing negative network effects and custom research one-offs(00:48:33) Whale hunting: High-ticket pricing and the billionaire value mindset(00:54:58) Zero-to-one incubation: Leveraging unique market access for business spin-outs(00:59:08) Romanian roots to billionaire circles: Mentorship and aiming high(01:07:48) PM as "Doctor": Why founders prioritize craft over business operations
Transcribe →