Jaffray Woodriff and Quantitative Investment Management would like to reintroduce themselves

• Jaffray Woodriff's Quantitative Investment Management wants to grow after a stretch of tough years.
• The 21-year-old manager changed its research process, freeing Woodriff to focus on what he does best.
• In conversations with Woodriff and those running the $1.1 billion firm, they're as optimistic as ever.

Jaffray Woodriff, the face of $1.1 billion Quantitative Investment Management, is stepping back into the spotlight.

The firm, which fell from $5 billion in assets a decade ago thanks to a stretch of underperformance, has been quiet—likely too quiet. When contacted for this story, a few allocators who had met with the firm before but hadn't been in touch for a number of years thought it had been transformed into a family office.

Headquartered in Charlottesville, the western Virginia town home to the University of Virginia, QIM became an easy option to skip for investors looking to meet with multiple funds in a day in places like New York or Greenwich.

Yet its three cofounders — 55-year-old Woodriff, president Mike Geismar, and researcher Greyson Williams — are as optimistic as ever about the future.

"This is as excited as I've ever seen him about research," said Geismar, who was roommates with Woodriff 30 years ago, nearly a decade before QIM started.

"He's not going to stop."

New hires and the creation of a research team have freed Woodriff, still the firm's investment engine, to spend more time on idea generation and less on implementation. There's a renewed focus on marketing, and the firm is courting investors from institutions around the world with hopes of growing up to $4 billion.

And it's the time is right for firms like QIM.

As large multistrategy managers like Millennium and its peers become a bigger part of institutions' portfolios, there's a growing need for volatility that a place like QIM, which systematically trades equities, indices, futures, and more and has no correlation to stock or bond markets, can provide. Performance ticking up has also helped.

Strong returns from both programs, including a 19.2% gain in its oldest strategy, in 2022 opened eyes again. This year, through October, the firm's more aggressive offering is up more than 34%, while its older program has returned 1.7%.

"I like math geeks. That's what Jaffray is, and his team," said Salem Abraham, an investor in the firm for 17 years and a longtime business partner of late billionaire T. Boone Pickens.

"QIM is the type of firm Harry Markowitz would have been happy to find," said Abraham, referring to the late academic who came up with the Modern Portfolio Theory.

Volatile ride for a volatile manager

The 21-year-old quant manager was a darling in the industry at its start. Woodriff, who lives in Charlottesville and owns a farm nearby, grew up on a farm outside the "magical city," he said. He went to college at the University of Virginia, where he came up with the foundation of his trading system during a Pepsi-fueled, 40-hour coding session.

In 2019, he made history by making the largest donation in the school's history, $120 million, to create a school of data science.

Woodriff, deemed "the monk in managed futures" by a 2009 Institutional Investor profile, got the reputation of someone "obsessed with markets and how they work," said Kyle Dunn, a former hedge-fund marketer who now consults for funds and worked with QIM to develop their "story."

Its Global Program strategy soared in its first two full years of trading in 2004 and 2005, with gains of 21.8% and 18.4%, before its strong crisis showing put the firm on the radar of bigger allocators. With gains of 29.6% in 2007 and 12.5% in 2008, the firm added assets quickly.

But the 2010s were not a decade for a strategy uncorrelated to stocks. The firm's Global Program lost money in 2013, 2014, 2018, and 2019. QIM's Tactical Aggressive strategy, launched in 2008 and willing to take bigger swings than the flagship, followed a 60% gain in 2017 with a 42% drop in 2018.

Assets left for more stable managers with strategies that weren't a black box.

"There were lots of conversations with clients about what went wrong," said Geismar, QIM's president. There were also conversations internally about how it had gotten to this point.

Woodriff said he had "thought experiments" about going the family-office route or closing one of the programs.

"The consistent theme has been: The research looks way too good to give up now," he said about the tough stretch of performance in the mid-2010s. The firm was helped by its equity investment into Florida-based Voloridge, a $9 billion quant manager run by David Vogel, who first met Woodriff when they were competing in a Netflix data science competition.

QIM charges no management fee, so when the firm's strategies lost money, there were no revenues coming in. But thanks to Voloridge's rapid growth and strong performance — the firm went from less than $1 billion in 2010 to more than $6 billion in 2020 — bonuses were able to still be paid out to keep employees happy.

Still, Woodriff admitted he had "gotten close to the threshold of shutting things down."

Back to being an idea guy

Instead, the manager reworked itself.

The firm's risk management was overhauled, and Woodriff began sharing some of the research responsibilities, in part thanks to the 2022 hiring of Chris Lankford, one of five research team members with Woodriff and Williams.

Lankford, who had worked as a consultant for QIM for a year before joining the firm full-time, has a doctorate in systems engineering (from UVA, naturally) and previously cofounded a company that tracks the eye movements of disabled individuals to help them communicate. The company was sold to DynaVox in 2010.

"For the first time in my career, I had people who could listen to me describe a complicated scenario and process and go do it three times faster than me," Woodriff said.

"There's such an increased speed in trying out ideas. It's a shame we didn't have this dynamic five, 10 years ago."

It's given some relief to allocators who were concerned with all of the risk-taking being tied to one person. Woodriff said there was an "extremely consistent drumbeat from investors and potential investors asking how dare you be the only one working on alpha."

"It's always been a difficult conversation," he said, in part because "people have known my best skill is idea generation and creativity," and he wouldn't have time to devote all of his energy toward that.

Woodruff said the research team, which also includes longtime data scientist Seth Oldham and 17-year QIM vet Greg Tylka, gives him a better answer to the "bus question" — as in, who would take over if he was hit by a bus, a common question allocators ask during due diligence to understand succession plans.

Lankford, in particular, has given a new lease on life to the firm, Williams said.

"He's been a great link" between Woodriff and other parts of the business, he said.

"I don't think Jaffray appreciated the constraints on his time before," Williams said.

Not going anywhere

While Woodriff has passions outside work — on top of his work building out the UVA's newest school, he received a US Squash Special Recognition Award in 2014 for his "leadership and substantial contributions to squash," of which he's an avid player — one conversation with the intense researcher reveals where his true passion lies.

"I knew in college I'd never want to retire," he said, and nothing about the past three decades has changed that drive.

Woodriff would be "bored" if he retired, his cofounder Williams said.

"It's a passion, career, and hobby for him," he said.

Those close to him say his renewed interest in the firm's strategies and more time to think have not so much reignited his passion as added fuel to the fire.

"They're a unique find and a unique fund," said Abraham, the investor in the firm and a longtime quantitative trader himself.

"It's difficult to find the things to make the stew special," he said. Stocks and bonds are the meat and potatoes of a portfolio. Funds like QIM are the pepper.

"They're spicy," he said.

Since college, Woodriff has been on a mission to "be totally different from everyone else."

In that regard, it should be no surprise the firm didn't shutter during its tough years or that Woodriff still believes in what he and his team can do.

"I still feel like I'm very good at it," he said.