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.

November 2018

Top hedge fund analysts face 10% pay hit as industry struggles

Financial Times (subscription)

Senior investment professionals at hedge funds are projected to take a hit this year as the industry struggles through one of its worst periods since the financial crisis. Average total compensation for senior analysts will fall around 10% from $651,500 in 2017 to $589,000 this year, according to advisory firm CompIQ. Read More

Parking lots don’t tell the full story: the trouble with alt data

Bloomberg (subscription)

Satellite imagery of parking lots can help track sales before they’re reported, but alternative data can’t tell you everything. Industry veterans tell Bloomberg what has worked for them, what hasn’t, and what they look for (or avoid) in data sets. Read More

Insurers: The first and next alt-data innovators?

Carrier Management (subscription)

Quandl co-founder and Chief Data Officer authored this byline for Carrier Management magazine to help insurers understand the value of their own data to Wall Street. Read More

Next-gen ESG: Going beyond the basics

Capital Finance International

Investors have long searched for actionable sources of non-financial information, data that may not be on the balance sheet but still offers material and relevant insights. Lately the emphasis has turned to ESG data. Read More

Separation brings value for fintech spinoffs

Waters Technology (subscription)

Wall Street firms have discovered the value of alternative data for investing. Now they’re seeking to profit from the datasets and technologies that they have raised in house, and are set to take advantage of commercial opportunities for these tools. Read More

How to empirically measure alt-data’s true value

Lucena Research

Lucena Research walks us through using a backtest to evaluate turnover and transaction costs. Read More

The convergence of investment research and alternative data

Integrity Research

Asset managers have reduced their spending on sell-side and independent research in the past few years, yet many firms have sharply increased their spending on alternative data sets as they look for innovative sources of investment insight. Read More

How to set up an AI R&D lab

Harvard Business Review

There’s a common misconception that rebranding as an AI company is as simple as having data, infrastructure, and off-the-shelf data and analytics. The reality is that AI is complex, high-risk, expensive, and often requires significant business transformation. Read More

New marijuana data clears haze for investors

Barron’s

Alternative investment data is a hot trend, and it’s hooking up with another one: marijuana. Headset, an analytics firm that works with marijuana retailers to help them track sales and inventory, will offer data on pot trends to the investment world. Read More

Will AI help fund managers, or replace them?

FN London (subscription)

Hedge fund managers want to dispel fears that robots are going to take traders’ jobs, but the Robopocalypse may still be coming. Researchers at London’s Alan Turing Institute say algorithms are getting better over time, but humans are not progressing as quickly. Read More

The rise of ‘quantamental’ investing: adapt or die

Financial Times

With varying degrees of gusto, fund managers are adapting to an era defined by automation, algorithms, and big data. ‘Quantamental’ investing is an admittedly awkward phrase, but many think its essence will define the future of asset management. Read More

UBS Asset Management taps alt data to increase alpha

Forbes

The bank’s investment management arm is starting to test and apply machine learning to fund flows, product innovation, alpha generation, risk management, and middle/back office operations. Read More

Firms to boost alt-data budgets by 240%

Financial Technologies Forum (subscription)

Asset managers are expected to dramatically increase their use of alternative data and advanced analytics, with investment in areas such as machine learning, natural language processing, and smart robotic process automation to more than triple over the next three years. Read More

Microsoft patent activity shows rising focus on AI

CB Insights (subscription)

Microsoft has applied for over 1,000 patents related to artificial intelligence or machine learning since 2012, in areas like healthcare, financial services, security, and more. While few of these patents will become products, it suggests the area will be a primary focus for years to come. Read More

The impact of artificial intelligence on the world economy

Wall Street Journal

A report by McKinsey says artificial intelligence has the potential to incrementally add 16%, or around $13 trillion, to current global economic output by 2030. Of course, along with this comes significant disruption for workers, companies and economies. Read More

CloudQuant partners with RavenPack to expand alt-data ability

Business Wire

CloudQuant has added of RavenPack analytics within their trading strategy incubator, enabling researchers to use RavenPack historical data to identify tradable alpha signals on the company’s online Python- and JupyterLab-based tools. Read More

Alternative data and the hunt for alpha: a rich man’s game?

Fintech Policy

This piece presents a contrarian view that likens the terms “alt data” and “alpha” to “dude” and “bro.” The author asserts that firms with a capital edge are sourcing all the unique data and squeezing relevant alpha out of it, diluting it so drastically that by the time it reaches the next management tier it’s almost completely devoid of value. Read More

China’s Orwellian social credit score isn’t real (yet)

Foreign Policy

China’s sweeping, data-driven, “social credit” initiative is sounding alarms by collecting vast information on its citizens. But contrary to the mainstream narrative, authorities are not assigning a single score that will determine every aspect of every citizen’s life — at least not yet. Read More

BlackRock shelves mysterious – but accurate – AI liquidity models

Risk.net (subscription)

Quants at the world’s largest asset manager shelved promising AI liquidity risk models because they couldn’t explain the output to senior management. Although the neural nets beat other models in tests, the results could not be explained. Read More

Web scraping: risk vs. reward

Data Driven Investor

For hedge funds, web scraping is yielding results. But at what cost? The “legality of automated data collection is still unsettled,” and firms should maintain a healthy paranoia. Read More

Job listings and employee sentiment data hinted at Starbucks’ layoffs

Thinknum

Starbucks on Tuesday said it would cut 350 positions, or 5% of its corporate staff, a move foreshadowed by job listing and employee sentiment data. Read More

Rough year continues for hedge funds, but alt-data fund up in Oct 

Opalesque (subscription)

Opalesque reviews performance of new funds for 2018, including D1 Capital Partners, Tiger Global Management, and HTL Capital Alpha. Read More

Five things you need to know before learning Python for a finance job

eFinancialCareers

Python programmers are in demand at banks and hedge funds. The language is easy to learn – it’s often used in UK primary schools to teach the basics of programming. However, before your first encounter with Python there are a few things you should know. Read More

Data management a cost challenge for financial institutions – S&P

Markets Media

Financial institutions are finding that the costs associated with data analysis go far beyond those of procurement. Businesses may spend up to 10 times more on data integration than they do underlying content, S&P Global Market Intelligence says. Read More

Privacy concerns remain with smartphone geolocation data

Toolbox

Smartphone geolocation data can provide investors with valuable information about such things as consumer spending habits. But stripping such data of personally identifiable information may not be enough to comply with GDPR.  Read More

China AI can identify suspects based on the way they walk

TechCrunch

China’s police are using gait recognition to identify citizens who cannot be detected through face recognition. The developer claims the algorithm can ID criminal suspects at up to 50 meters, even when their faces are obscured, although Keyser Söze demonstrated how this system could be gamed as far back as 1995. Read More

Banks selling more data, less analysis

Wall Street Journal (subscription)

Banks have long crunched data on earnings, price targets, and other traditional metrics to produce reports for clients. Now they are increasingly making their data feeds available directly, without the surrounding research notes. Read More

No one reads reports

Bloomberg

Referencing the above WSJ report, Bloomberg’s Matt Levine is unsurprised that bank analysts are providing raw data, saying that it’s just giving people more of what they can use and fewer reports that they don’t read. “If you are in the business of providing content that investors will read… you’ve got to give them the content that they want, and these days that means alternative data.” Read More

Alt data the norm for hedge funds, but PE slow to adopt

Institutional Investor

According to EY’s 2018 Global Alternative Fund Survey, hedge funds largely think of alternative data as the new normal and 70% expect to use it regularly. But private equity managers are behind with nearly half not expecting to use this data in the future. Read More

Asset managers accelerate use of alternative data

Finextra

Advisory firm Element22 posits that there is a four-year journey to full assimilation of alternative data for asset management firms. Those at the mid-point expect to increase their investment by 240% as they begin to reap its benefits. However the majority say their efforts are at an “early stage”. Read More

Where Bezos flies most, and what it may say about Amazon’s HQ2

Washington Post (subscription)

Analysts used corporate flight data to predict the location for Amazon’s second headquarters. As subscribers to Quandl’s Corporate Aviation Intelligence data<know, flight data can successfully identify mergers and other market-moving events. And as Amazon’s response to WaPo shows, companies aren’t fond of having jets tracked. Read More

Alternative data presents due diligence challenge

Castle Hall Diligence

As more hedge funds adopt alternative data, they will need to develop policies to ensure compliance, such as how to evaluate whether non-public information isn’t inside information, whether alt-data vendors are reliable, and whether data adheres to privacy regulations. Read More

Your phone’s location data is worth big money to Wall Street

Wall Street Journal (subscription)

The advent of smartphones means location data is no longer controlled by a few carriers, and it is also much more accurate. Aggregated, this data can paint detailed pictures of how people spend their money.  Read More

Could this new powder save us from an impending data storage crisis?

Silicon Republic

Exponentially rising demand for storage means new solutions are needed, so Belgian researchers have developed a way to use powder as a form of data storage. They believe this to be environmentally friendly, as it reduces the quantities of materials needed to make USB sticks and hard drives and lessens the need for huge energy-consuming servers. Read More

Just name your company “Blockchain”

Winton

What’s in a name? A century of US stock market data reveals the changing fashions in company naming, and how investors reward firms with names that reflect the zeitgeist (whether or not company fundamentals warrant it). Read More

Talking AI: is data really the new oil?

CityWire Selector

Mathematician Clive Humby famously stated that “data is the new oil.” It’s valuable, but if unrefined it cannot really be used. It has to be changed into things like gas, plastic, and chemicals to create value, just as data must be broken down and analyzed. It’s a powerful analogy, but is it true? Read More

When quants go rogue: the case for becoming a hired gun

eFinancialCareers

Funds are fighting to hire quants, throwing six-figure salaries at entry-level engineers and data scientists. But some quants are eschewing the steady paycheck in order to work for themselves. Read More

The power of AI targeting and alternative data for institutional investors

Q4

Today’s most sophisticated institutional investors are using AI and alternative data to continually add efficiencies, increase their incremental alpha, reduce costs, and comply with an ever-evolving regulatory landscape, including the EU’s revised Markets in Financial Instruments Directive (MiFID II). Read More

How Point72 uses quant fundamentals in venture capital

Bloomberg

In this video, Matthew Granade, Point72 chief market intelligence officer, tells Bloomberg how the company uses quant fundamentals in venture capital. Read More

AI predicts Berkshire Hathaway at risk from hedge funds

FN London

A study of Warren Buffett’s investment business by a UK-based fintech company that analyses the effects of AI on markets, has estimated that more than $10bn worth of the conglomerate’s holdings may be vulnerable to short-selling hedge funds. Read More

Investors must consider the implications of disruptive technological change

Think Advisor

A new paper from PGIM, the investment management arm of Prudential Financial with $1.2T AUM, delivers a thoughtful perspective on the macroeconomic impact of technological acceleration. (Read the full paper) Read More

Sentieo raises $19m to challenge Bloomberg with AI-powered terminal

Hacker Noon

AI-powered investment-research platform Sentieo is planning a sales and marketing blitz, fueled by a new $19 million Series-A round, as it seeks to challenge the dominance of the Bloomberg Terminal. Read More

20 top lawyers beaten by legal AI

Hacker Noon

A legal AI crushed 20 top US corporate lawyers in a test to find legal issues in five non-disclosure agreements (NDAs), The LawGeex AI achieved an average 94% accuracy rate while the lawyers who achieved an average rate of 85%. It took the lawyers an average of 92 minutes to complete the task, compared to 26 seconds for the AI. The attorneys consider what their defeat may mean for the legal profession. Read More

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