Alternative Data Weekly Newsletter Archives

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A curated digest of must-read news from around the internet about alternative data. Join the buy-side professionals already reading the Alternative Data Weekly.

October 2016

What is Your Data Worth?

LinkedIn

It’s understandable for data owners to assume that their data is worth millions when their big-bank, hedge fund customers make billions, but it’s not that simple. In this thoughtful post, Rich Brown walks us through factors we have to examine when assessing the value of data. Does it have predictive power? Is it available exclusively? How deep is the history? Is it easy to use? Those of us making a business out of data need to understand all of this and more. Read More

Woebegone Stock Pickers Vow: “We Shall Return”

Wall Street Journal

Are we really already talking about the other side of the coin? Sophisticated data and technology are becoming available at unprecedented rates. Meanwhile, there are asset managers who still prefer to make money with good old-fashioned, fundamental stock picking. While some think that quantitative funds are the only ones with any advantage in today’s era of data ubiquity, others stick to their old methods and believe a revival is imminent. Read More

Weapons of Math Destruction

Big Think

There’s the story data tells, and then there’s the real story. In her new book, former hedge fund data scientist Cathy O’Neil explains that mathematics is “not only deeply entangled in the world’s problems but also fueling many of them.” In fact, algorithms that blindly make decisions based on math and data alone could be ruining our lives. Now that’s something to think about if you write algorithms for a living. Read More

The Search For Edge In Emerging Markets

Chief Investment Officer

According to Geoffrey Wong from USB Asset Management, emerging markets are very inefficient, with information about companies being less “baked into the price” of a stock. What does this mean? That here lies a golden opportunity for outperformance, and what better way than through alternative data? Unfortunately, such data is hard to gather from emerging markets where the internet has not penetrated as deeply compared to developed markets. Nevertheless, companies mining this data are ready for the challenge. Read More

Tudor Said to Invest Millions to Blend Data and Macro

Bloomberg

Paul Tudor Jones joins the ranks of data-obsessed hedge fund billionaires. His company recently invested in a pair of startups led by entrepreneur Gil Syswerda that explore better ways to digest and interpret data from non-traditional sources. He has also doubled down on investing in his own data science team, like others in the industry. Can Jones leverage data and the scientists who interpret it to restore his returns to their former glory? That’s the bet. Read More

Good News for Investors: Marketers Are Closing in on Mobile Attribution

Street Fight

Mobile attribution is the holy grail of marketing; its complexities hotly debated and analyzed. We are getting ever closer to understanding the relationships between our mobile behavior and in-store purchases. If this can truly be solved, it will provide a big advantage – not only to retailers but to investors in retail companies as well. Read More

On Demand Drone Reconnaissance Missions

TechCrunch

Well this is very convenient: Hangar Technology wants companies to be able to book drones and a drone pilot to gather data on an as-needed basis. From disaster surveillance for insurance companies, to crop assessments for farmers and commodities traders, the uses for such a service are endless. Regulatory issues aside, this could be a data hunter’s dream. Read More

Playing Matchmaker for Startups and Big Investors

Harvard Business Review

Remember missed connections on Craigslist? That seems to be the case for startups and large institutional investors like pension funds, endowments, and sovereign wealth funds. Harvard Business Review research shows that while 76% of these investors see the potential for startups to drive innovation, exactly 0 have anything in place to proactively seek them out. HBR thinks things will improve, that “startups and large investors will soon become better at finding one another.” What opportunities will flourish when these connections are no longer missed? Read More

America’s Spy Agency Is Investing in Data

Datanami

In-Q-Tel is the CIA’s enigmatic venture capital arm and its investments reveal that they, too, are interested in the same technologies as the world’s leading hedge funds, particularly with respect to lightning-fast data processing capabilities. Our friends at MapD are gaining traction and have secured investment from In-Q-Tel. Their powerful database can scan data at 5TB per second and is already being used by banks, government agencies and telcos. Speed still may hold an edge, after all. Read More

Are Drones A Legitimate Source of Alpha?

Quandl

The commercial drone market is expected to balloon to USD 1.05 billion by 2020. While already being used in the agriculture, mining and insurance industries, drone data’s availability for capital markets remains a challenge. The corpus exists, but some question its quality and many question its ownership. Read More

Inside Billionaire Steve Cohen’s Comeback

Fortune

In 2013, billionaire Steve Cohen paid a $1.8 billion fine and shut down his hedge fund after pleading guilty for insider-trading. Now, like Phoenix from the ashes, Cohen has risen again, this time as a data hunter for his new firm, Point72. “I’m like a kid in a candy store,” he says, of touring Silicon Valley looking for data to use. Of course this time, whether the data is from credit cards or satellites, it must be honestly verified, legally usable and still generate incredible returns for one very resilient hedge fund manager.Read More

Gut Instinct Guides Us and We’re Lucky It Does

Ottawa Citizen

There’s Darwin’s idea of natural selection, and then there’s this: that the markets select for good gut instincts. Derivatives-trader-turned-physiology-researcher John Coates studied the correlation between trading performance and strong gut instincts. It turns out that traders who are aware of their own heart rate and stress levels make better trading decisions and last longer in the business. Proving that even our gut instincts can be data driven. Read More<

Twilight of the Quants – Everything Old Is New Again

Tabb Forum

From July 2015 to July 2016, hedge funds faced a struggle to return even 3%. Why the difficulty? Quandl’s Abraham Thomas explains in this piece for Tabb Forum that the industry is undergoing a secular shift: the primary source of investment alpha is shifting from technology to data. Though not unprecedented, this is the first time we have had access to such a vast corpus of potentially predictive data. “Hedge funds, investment managers and data vendors that recognize and act on this shift will be successful. The others will be left behind.” >Read More

Catana’s Big Data Fund Stumbles, Founder to Take Up CEO Role

Opalesque

Despite the explosion in so much actionable data, not all is well for every quant fund. Frankfurt-based Catana Capital launched its Big Data fund on June 30, 2016. The company has indicated that bugs in its algorithms are to blame for it’s -3.9% loss, and has made some management moves to course correct. Read More

Quantbot Hunts for Brainpower to Feed Quantitative Model

Financial Times

Conversely, quantitative firm Quantbot, also betting hard on data, is performing very well and growing fast, as reviewed by the Financial Times. Quantbot’s platform is ready to rumble, but it lacks trading signals and it needs people to put all the pieces together. It’s always nice to see that the machines aren’t taking over yet. Read More

Following the Money in Today’s Internet of Things

Accredent

We’re headed for a trillion dollar sensor ecosystem, which is virtually unfathomable. Here is how money is being spent on the Internet of Things today. Read More

Your Email Receipts Predict Amazon’s and Uber’s Revenue

Quandl

Where and when people spend their money is invaluable insight for everything from measuring the state of the economy as a whole to studying individual goods and services. More and more receipts from spending show up in our email inboxes, allowing us to perform that analysis in near realtime. In this post from Quandl’s “Alternative Data In Action” series we present analysis of Amazon and Uber performance based on a million North American email receipts. Read More

There’s a New Breed of Trader on Wall Street, and They’re Becoming the New ‘Masters of the Universe’

Business Insider

Comparing quantamental investors to cockapoos may not sound great, but the analogy works when describing people who combine bottom up stock picking with big data analysis. In this world, the new “masters of the universe are no longer the folks wearing suits and going to galas- it’s the folks crunching data on Python and going to meetups.” Read More

The Big Data Race

The Telegraph

Once the treasure of academics and geeky hedge fund managers, alternative data in its many forms is now being sought by the big boys. Mainstream powerhouses like Goldman Sachs have joined the race for data, and with last year being one of the toughest for wealth management companies, it seems like they have some catching up to do. Read More

Farmers Edge Investing Millions in Sustainable Crop Production

Manitoba Co-Operator

It’s promising news when an international commodities trading firm invests in an AgTech company. Farmers Edge uses data to make crop production more sustainable. It’s the yields and profits that this data might be able to predict that make AgTech an industry to keep watching. Read More

First Steps to Innovating Your Investment Process with Alternative Data

Eagle Alpha

Our friends over at EagleAlpha produced this White Paper that outlines specific steps asset managers can take to start incorporating alternative data into their investment process, covering meaty topics like staffing, budgets, and organizational dynamics. Pour yourself a drink and start reading. Read More

How the Street Light Has Been Given a Hi-tech Makeover

BBC

Forget about car counting and start thinking about street lights. Data-collecting LEDs are increasingly lighting up city streets. Their data-gathering capabilities have been hailed as crime fighters, turtle protectors, and cyclist-saviors, but evidence suggests they also collect data around traffic patterns better than satellites counting cars. Read More

Why Hedge Funds, Militaries, and NGOs All Want This Company’s Satellites

Inc.

Another one from the annals of “satellite data is good for finance”. This time it’s a review of Spire Global. With inexpensive, one-time-use satellites the size of whiskey bottles, Spire wants to collect data that no one else can by doing something truly unique: listening, as opposed to watching. Read More

Bananas About Inflation

Markets For Good

Nick Eng and Neal Myrick present 3 case studies of enterprising researchers using alternative data sources to estimate macro-economic indicators such as inflation, poverty and purchasing power. Read More

Data-Driven

Business Insider

A new research report from McKinsey suggests that monetizing car data on a global scale could lead to revenues of $450 billion by 2030. At least some of that revenue will come from hedge funds trawling car data for market insight. Read More

Too Many Images, Not Enough Insight

Northern Sky Research

NSR’s Prateep Basu writes that “the earth observation industry is faltering in ground-up market development”: there are too many satellites, and not enough applications for the data they produce. He calls for smart “small data” companies to fill the gap. Read More

Fear And Loathing On Wall Street

Business Insider

Sentiment data may be passé – but what if it’s your own sentiment being measured? Some hedge funds have started parsing chat logs and email threads in real time to identify when their traders are overly emotional, and prone to bad decisions. Sell, Mortimer, sell! Read More

Quantamental Investing Is Here To Stay

Business Insider

In a thoughtful interview, Point72’s head of data Matthew Granade suggests that different modes of investing — fundamental, discretionary, quantitative, and alternative data driven — are converging into a single hybrid style of portfolio management. Read More

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