At the front lines of computer logic, George Wells established a $600,000 laboratory that assembles various financial data and predicts monetary trends for a pool of private investors. “The computers track as many as 100 variables at any given time,” says Wells, president of Versaille Capital, an investment firm in Auburn Hills.
Using sophisticated algorithms to monitor trading activity around the world, including stocks, bonds, commodities, and other investment offerings, Wells and his team seek to capitalize on market movements regardless of the direction — either up or down.
Any number of market activities can trigger the computer to recommend that Wells and his team manually buy or sell technology stocks, copper futures, or mutual funds. Most recently, the company completed a platform for monitoring investment markets in Japan, China, and Korea. “The great thing about the computers is they never sleep,” Wells says.
Launched in January, the $2-million fund has 15 investors, each of whom must have $250,000 in annual income or more than $1 million in investable assets. Between 10 percent and 15 percent of an investor’s portfolio can be dedicated to the fund. Wells says he has room for a handful of additional investors, although participation is by invitation only. “We’ve been adding investors by word of mouth,” he says.
The Chicago Mercantile Exchange, along with many large investment firms on Wall Street, use algorithms to help predict investment activity. The trend is now catching on in smaller markets, too. “The real expertise comes from tracking the data, organizing it, and interpreting it,” Wells says.
So far, the fund has grown around 10 percent — more than double the growth rate of the S&P 500 during the same period.
The secure laboratory, where various computers are visible behind smoked-glass panels, is linked to a T3 data line (28 T1 lines bundled together). The T3 line can handle some 100 megabytes per second. “The laboratory melds software with manpower, and there are a lot of rules in operating what is essentially a hedge fund,” Wells says.
Following 10 years as a mechanical engineer at Chrysler, Wells launched his first company, Legacy of America Inc., in 2006. The retirement planning firm, with more than 250 clients, has $125 million under management — up from $4 million in 2006. db