Alternative Data Newsletter #145 – November 22nd, 2019

Key Highlights

  • Data Quality: Eagle Eye reports. Buyers of data are focusing on reducing the “time to insights” during a data trial, so they can more quickly judge the potential of a dataset to suit their needs. Providing this insight prior to committing to a resource-intensive trial has been a focus for Eagle Alpha’s Data Science team, which presented Eagle Eye data quality testing results on vendors attending the event.
  • Alpha Capture Predictions. 20 vendors presented their best alpha predictions to the audience. The audience voted for the winners: 1) A geo-location case study regarding Tesco vs. Lidl 2) An app case study regarding streaming wars 3) A commodity price forecasting company regarding industrial and energy prices. Alpha Capture predictions from vendors are accessible on our Data Sourcing platform.
  • Mapping: Still a consistent pain point for both buyers and vendors of alternative data, the market appears to be favouring specifically-targeted solutions instead of unified mapping products. Both vendors and buyers of alternative data are increasingly seeking problem-specific solutions such as product/brand to ticker, transaction descriptions, document-based entity disambiguation, and social media entity tagging.
  • Standardization: FISD has published the new DDQ (dataset due diligence questionnaire). This will significantly shorten the sales cycle for vendors and on-boarding for buyers. Contact us to discuss.
  • ESG: Firstly, J.P. Morgan quant research team gave a really interesting presentation regarding its ESGQ tool that helps investors pick stocks in a responsible way. Secondly, ESG frameworks (that incorporate underlying data rather than scoring) are now becoming essential to compete for client mandates. A lot of firms still have a lot work to do on such frameworks. ESG is not just a European trend, systematic and fundamental firms in North America are asking for more ESG data.
  • Process Automation/Outsourcing: Elizabeth Pritchard (ex Crux, Eagle Alpha Board Member) gave a very interesting opening address on the parallels between industrial process automation/requirements and research and data processes within funds. She noted how so much of the data supply chain processes (sourcing, data preparation, alpha testing, compliance) can now be outsourced and that this may be more efficient than hitting constraints in-house.
  • Outsourcing Alpha Testing: There are a growing number of Alpha testing services externally. While there are many approaches to alpha testing and no uniform view of alpha, we believe usage of 3rd party services to get initial view on ‘alpha potential’ will grow.
  • Data Company Meeting Requests (>600 1×1 meetings on the day). 1) Social Media company – differentiate versus peers in their ability to segment a suitable audience on social media and provide sentiment analysis. This greatly reduces the noise in the data, providing actionable insights 2) New to market Business Insights dataset. They are the only alternative data provider that provide access to a database tracking companies capital investment 3) New to market Sentiment provider. The first alternative data vendor that we are aware of that will do real-time voice analysis on earnings calls to capture sentiment on management calls.
  • Audience polls. 2 highlights from smaller breakout sessions. Qs 1: How many datasets do you test per year? 36% said 5-10,  27% said 11-25, 9% said 26 – 50. Qs 2: What is your average conversion rate of datasets from trial within 12 months? 36% said less than 5%, 45% said 6% – 10%, 18% said 11% – 20%. A key objective of Eagle Alpha when working with buyside is to increase throughput and conversion. The operational and portfolio implications of low conversion are significant.
  • Private Markets & Corporates: The mix of corporate, private equity, credit and real estate attendees continues to increase. This is a useful lead indicator on the adoption cycle. Please contact us to discuss how we are helping private markets with alt data for idea generation / due diligence and Corporates with external data,