Alternative Data Newsletter #75 – June 28th, 2018

Summary Highlights

1. Proprietary Datasets:Eagle Alpha went live with its first semi-proprietary dataset in May – RevCast. The RevCast dataset provides quarterly revenue predictions for major US consumer companies and is exclusive to Eagle Alpha.
2. Exclusive Datasets: Eagle Alpha organized the first IDO (Initial Data Offering) roadshow this week for a corporate aviation data provider.  Roadshow included visits to asset managers in Chicago, Boston and New York. This data provider has mapped corporate jet ownership and locations to publicly traded companies as corporate jet travel between certain locations could be a sign of a dialogue between companies.  Please contact us if you would like more information.
3. Roadshows: An employment, location, insurance and pensions data provider is meeting funds in London on July 23-25.
4. Events: Our next working group meeting will be held on July 10th to discuss the dataset pricing.
5. Data Analytics: Online conversation surrounding L Brands is largely in line with the decline in fortunes of the company in recent years. The data points to a stabilization in online consumer voice,.
6. Bespoke Projects: How can alternative data be used to monitor the uptake of Lemonade Insurance and other emerging disruptors in the insurance industry?
7. Data Forum: A recently published article explores the relevance of alternative data for investors with infinite or very long investment time horizons, such as public pension funds, endowments, and sovereign wealth funds.
8. Featured Articles: 1) Why multi-asset strategies need real-time data systems; 2) Antitrust Law and Data Processing: With Big Data Comes Big Responsibility; 3) Your data is an asset like your house, education, car, and furniture.
9. Update For Data Vendors: We published a comprehensive white paper on how vendors can sell their data to asset managers. Download it from https://selldata.eaglealpha.com.

Detailed Highlights

1. Proprietary Datasets

Clients get access to our proprietary datasets e.g. Eagle Alpha went live with our first semi-proprietary dataset in May – RevCast. The RevCast dataset provides quarterly predictions for major US consumer companies and is exclusive to Eagle Alpha. Eagle alpha built the dataset by combining data from a prominent consumer transaction data company, with online search data and historic financials.

Since going live, RevCast has outperformed with backtested percent accuracy in the high 60’s. In the current earnings season, RevCast has accurately captured the direction of a revenue beat or miss 66% of the time across 57 US consumer stocks. 37 of these 57 stocks beat or missed consensus revenue estimates by more than 1.5%. RevCast accurately called 22 of these material beats or misses, equating to a 59% material beat/miss capture rate. There is currently one prediction outstanding for the current earnings season, Bed, Bath & Beyond (BBBY).

To learn more about the Eagle Alpha RevCast dataset please contact us at enquiries@eaglealpha.com

2. Exclusive Datasets

Eagle Alpha organized the first IDO (Initial Data Offering) roadshow this week for a corporate aviation data provider.Roadshow included visits to asset managers in Chicago, Boston and New York. This data provider has mapped corporate jet ownership and locations to publicly traded companies as corporate jet travel between certain locations could be a sign of a dialogue between companies. Please contact us if you would like more information.

3. Roadshows

Upcoming roadshows (contact mark.vaughan@eaglealpha.com for more details)::

  • June 29, NYC: A corporate aviation data provider is meeting funds.
  • July 23-25, London: A provider of detailed corporate employment and employment benefits data is meeting fund managers. This vendor leverages filings with the IRS and U.S. Department of Labor that pertain to employee benefit plans. Supplemental data is obtained from web crawling. Limited spaces available.
  • August 20-21, London: A data provider that tracks retail pricing and product promotions is meeting funds.

Contact us to speak to our data sourcing team: enquiries@eaglealpha.com.

4. Events

Upcoming calendar:

  • Data Forum July 10th, online meeting to discuss dataset pricing.
  • Data Forum July 12th, online meeting to discuss industry developments in the geolocation space and to compare notes geolocation data quality evaluation.
  • Data Forum July 17th, online meeting to finalize a standardized trial agreement between asset managers and data providers.
  • Data Forum July 24th, call to discuss the concept of sharing groundtruth data.

Register your interest by emailing enquiries@eaglealpha.com.

5. Data Analytics
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Using Eagle Alpha’s Web Queries tool, we examine Twitter mentions of Victoria Secret categories and products. Company actions in 2016 had a significant negative impact on Twitter conversations across all of the company’s products. Mentions bottomed in early 2017, rebounded, and then declined again later in the year. Currently, it appears that mentions have bottomed again and are rebounding. Digging into the company’s core products shows a notable shift to Very Sexy and Dream Angels products in the last two years.

The recent rebound in conversations on Twitter may be an early sign that consumer interest in the brand is turning for the better. This could influence fundamentals later in the year. Mentions related to the company’s core products of bras and panties, as well as sport related products is improving. Pink related topics continue to struggle while volumes surrounding beauty related topics have softened thus far in 2018.

Eagle Alpha’s latest reports:

Contact us to speak to our analysts (who have over 5 years experience working with alternative data): enquiries@eaglealpha.com.

6. Bespoke Projects
Eagle Alpha does Bespoke Projects for clients that are relevant to specific research questions. For example, how can alternative data be used to monitor the uptake of Lemonade Insurance and other emerging disruptors in the insurance industry?

7. Data Forum

Knowledge Center:

A recently published article (Monk, Prins and Rook – ‘Rethinking Alternative Data in Institutional Investment’) explores the relevance of alternative data for investors with infinite or very long investment time horizons, such as public pension funds, endowments, and sovereign wealth funds. The article notes that these investors will leverage alternative data in ways that are materially different than how money managers, whether buy & hold strategies or long/short strategies, are leveraging alternative data. The article states that money managers currently use alternative data for trading or short-term strategies. In reality, many managers use alternative data to do a reality check on their investment thesis. Regardless, the ability to invest and divest with some agility is not a characteristic of these long-term managers.
The ways that longer term investors will use alternative data include:

  1. Due diligence when purchasing an investment, including risk analysis.
  2. Better oversight of asset managers in areas such as real estate, utility projects, and corporate managers in the case of investments in corporate debt and equity.
  3. Analysis of their internal investment process and decision making.

As other surveys have shown, these investors are generally not well prepared to manage alternative data. The survey of decision-makers from 22 leading institutional investors (including money managers) showed:

  • 70% feel that alternative data could help improve risk-adjusted returns.
  • 90% have no defined alternative data strategy.
  • Of the 10% that do have alternative data strategies, all stated that they are “not well developed”.
  • Less than 15% are equipped to handle multiple forms of alternative data.
  • 60% are actively monitoring developments in alternative data.

The article recommends that investors leverage third parties, such as Eagle Alpha, to aid in sourcing, processing and maintaining alternative data.
Among the biggest challenges encountered are:

  • Lack of “suitable ways to invest”. There is still a lot of uncertainty regarding how to practically apply alternative data sources.
  • Current state of IT infrastructure.
  • Organizational culture.
  • Support from key decision-makers.

8. Featured Articles
Why multi-asset strategies need real-time data systems.
Antitrust Law and Data Processing: With Big Data Comes Big Responsibility.
Your data is an asset like your house, education, car, and furniture.

9. Update For Data Vendors

1) Given Eagle Alpha CEO’s previous experience doing IPOs at Morgan Stanley, we created the term “IDO”, which stands for Initial Data Offering. Engage with us to take your dataset on a roadshow visiting investors who are specifically interested in what your data has to offer. The conversion from roadshow meetings to licenses is significantly higher for these meeting than the short meetings that take place at events.

2) We published a comprehensive white paper on how vendors can sell their data to asset managers. Download it from https://selldata.eaglealpha.com.

3) A standardized trial agreement document will be published in July. Contact dataforum@eaglealpha.com to obtain a copy.

4) Our next Data Showcase event will be held in Hong Kong this September. Vendors who want exposure to the APAC region should contact our Data Team – dataenquiries@eaglealpha.com

Since 2012 Eagle Alpha has enabled asset managers to obtain alpha from alternative data – contact us to discuss your needs.