Investment legend Seth Kraman talks about how his fund uses AI

Artificial intelligence may one day support the entire industry, but among hedge fund elites, it is not yet a threat.

In an episode of Columbia Business School's Value Investment in Legends Podcasts this month, hedge fund Titan said he and his colleagues mostly used early technology as a time-saving time, assigning tasks that low-level staff may have done in the past.

“We started using it as an inherently capable assistant, a summer intern,” Klerman said. “How to aggregate data more quickly, not people who know what stock they're buying.”

Klarman cited some specific examples of how his colleagues used it.

One way was to analyze the company applications.

“He asked AI to look at the company's 10-year annual report and compare changes in the annual report over the years. They might reveal how they communicate, how their business changes, what their lawyers were worried about, or what it was,” Klarman said.

The other was to identify the logo of a company that one of his employees had never seen to help them get a better idea of the industry landscape.

“He would have run it to an intern, but AI did it in about five minutes and saved three days of work,” Klarman said.

Klarman also said that although he himself uses AI, he was not particularly impressed. He asked the chatbot to generate questions before speaking at an event with a well-known business executive.

“It was no help coming back,” he said. “I like to ask them things they've never thought of before.”

It's not the only company that uses AI to improve efficiency. Morgan Stanley and Bank of America have begun training staff to use this technology to increase productivity. Consulting firm Thoughtlinks found in a recent survey that by 2030, 44% of bank tasks, including 32% of sales and trading tasks, could be “redefine” by AI.

Despite using this technology, Klarman said he is worried that AI can hurt people's abilities to be creative. A recent MIT study found that using AI reduced memory and brain activity.

“I think using AI in the wrong way will solve the problem without applying the brain,” says Klarman. “It's like you don't really need to read the end of the novel and then you don't really need to know how the whole thing happened. So I like to do it in order. The correct order is, “Here's what I think.”