A numerical algorithm for studying strongly correlated electron systems is proposed. The groundstate wavefunction is projected out after a numerical renormalization procedure in the path integral formalism. The wavefunction is expressed from the optimized linear combination of retained states in the truncated Hilbert space with a numerically chosen basis. This algorithm does not suffer from the negative sign problem and can be applied to any type of Hamiltonian in any dimension. The efficiency is tested in examples of the Hubbard model where the basis of Slater determinants is numerically optimized. We show results on fast convergence and accuracy achieved with a small number of retained states.
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