Back in January 2017, alternative data company Quandl combed through corporate aviation information and it noted that the Johnson&Johnson corporate jet had been parked near the headquarters of Actelion Pharmaceuticals for five days. This was just one week before J&J acquired Actelion for $30 billion. This is now representative of the type of actionable information that asset managers are actively seeking to get the jump on competitors.
Yizhu Wang writes about the emerging fintech data vendors using unorthodox metrics to giver clients an edge in this report published in Forbes:
The scope of data used by financial professionals has become more diverse, including job listings, social media posts and satellite images, as well as foot traffic at stores. Because of the application of artificial intelligence, machine learning and natural language processing, companies are able to make vast pools of data easier to search and view, and more accurate in predicting future trends—or formulating investment decisions.
While Bloomberg and Thomson Reuters are established traditional financial data vendors, specialists in alternative data are smaller and less well known, including Neudata, BattleFin, as well as Quandl and Eagle Alpha, says Dale Richards, managing director of Island 20 Ventures. Richards was formerly a board member at Quandl and now sits on the board of Eagle Alpha.
Alternative data providers have emerged in the past few years to meet the demand by investment firms for unique business metrics to help them generate alpha, a technical term for excess return, notes Alexis Kalmanovitz, managing partner at boutique investment bank Zelig Associates. Exchanges as well as data vendors, such as FactSet, Bloomberg, S&P Global and Refinitiv could use acquisitions to strengthen their position in alternative data, Kalmanovitz adds.
Alternative data is also being applied to environmental, social, and governance (ESG) analytics, Pedone said. San Francisco-based Truvalue Labs helps buyside firms calculate the social impact of their investments. While incumbent companies such as MSCI, Institutional Shareholder Services (ISS) and Bloomberg offer tools for ESG analytics, Truvalue Labs has a niche in leveraging alternative data, Pedone added. Truvalue Labs’ data sources take non-financial information into consideration, such as blogs, news stories and social media.
