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Science of Making Money

Tuesday, 24 Apr 2012 | 6:09 PM ET
Fast Money Portfolio
Fast Money Portfolio

If you’re looking for a global markets success story, look no further than David Harding, chairman & head of research for Winton Capital.

Described as "one of the pioneers of the hedge fund industry" Harding has been ranked among the top 50 hedge fund managers worldwide by Alpha magazine, and he was listed at 158 on the Sunday Times Rich List 2010.

When Harding launched his firm in 1997, he had $1.6 million in assets. By 2009, As of February 2012, Harding had launched two more Winton funds and his firm held a total of $28.5 billion in assets. The fund has returned on average 18 percent net per year.

How does Harding do it? Fundamentals? Technicals? Not exactly.

Harding is not what you’d call a conventional investor. He has astronomers – physicists, mathematicians, statisticians and one economist on staff.

How does he work?

Harding tells us “we look at statistical patterns of behavior that we can find by scouring historic market data with computers and then betting these patterns will recur over and over again.”

What's he doing, right now?

"Currently we’re long stocks and bonds, as well as oil. And we have mixed positions in commodities. Also, we’re long commodities currencies and short the Japanese yen," he says.

Intrigued?

David Harding rarely does interviews but he spoke with the gang as part of our ongoing Fast Money Portfolio series. Check out our entire conversation. Watch the video now!

FM Portfolio: Applying Science to Financial Markets
David Harding, Winton Capital founder, chairman & head of research, explains how to calculate market moves with scientific research.




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Trader disclosure: On April 24, 2012 , the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Brian Kelly is long QQQ CALLS AND PUTS; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is short SPY; Karen Finerman is short MDY; Karen Finerman is short IWM; Joe Terranova is long VRTS; Joe Terranova is long MCD; Joe Terranova is long NXPI; Joe Terranova is long JPM; Joe Terranova is long JOY; Joe Terranova is long HPQ; Joe Terranova is long LQD; Mike Murphy is long AAPL; Mike Murphy is long JPM; Mike Murphy is long INTC; Mike Murphy is long ANF; Mike Murphy is long SBUX; Mike Murphy is long FCX; Mike Murphy is long PHM; Mike Murphy is long MCD; Mike Murphy is long BRCM; Mike Murphy is long CAT

For Mike Khouw
Nothing to disclose

For Dan Berenbaum
Nothing to Disclose:
The Primary Analyst (including his/her household) does not have a financial interest in the securities of the subject company(ies), nor does MKM Partners LLC habitually deal as principal in transactions in the securities referred to herein (or other instruments related thereto), including positions and transactions contrary to any recommendations contained herein held by the research analyst/household. The Firm has not engaged in transactions with issuers identified in the report. MKM Partners LLC does not make a market in the subject company(ies). The subject company(ies) is(are) not currently, nor for the past 12 months was(were), a client(s) of the Firm. The research analyst does not serve as an officer, director or advisory board member of the company(ies) and receives no compensation from it(them).

For Karen Hotlhouse
I, Karen Holthouse, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

CNBC.com with wires.