They have very smart people with PhDs in disciplines including NLP and cryptography inventing models to predict prices, and other very smart people refining the technology and execution. They are extremely secretive about the details of the strategies beyond that, and they probably change fairly frequently anyway. Slightly more detailed info:
While the possibility of "magic sauce" is in theory possible, its existence would suggest that it is currently possible to mathematically describe the behaviour of stock markets in such a way as to generate 35% p.a. returns by trading entirely based on this description.
A priori, this seems very unlikely.
Alternatives, such as an unusual access to information, and/or efficient use of existing laws, e.g. those surrounding taxes, are much more plausible.
http://quant.stackexchange.com/questions/998/strategy-of-ren...
https://quantivity.wordpress.com/2011/05/08/manifold-learnin...