Category Archives for Press

Five Powerful Ways To See If A Stock Is Overvalued

“Ultimately, a company can only be valuable if it is producing goods and services that others want. Companies that are experiencing increasing demand on Main Street will often see increasing share values on Wall Street.

Company earnings reports, same-store sales numbers, and alternative data sources can give you insight into whether or not the company is likely to grow over the next 1-3 years.”

Read the full article at: Forbes.com

10 Good Reasons For AI To Keep Evolving In Finance

“We can plan for the market and ride the waves, but having a more accurate prediction of market conditions will only help businesses react more effectively when there is a market turn. Being able to capitalize on a good market means more investment. Bracing for a downward trend is effective mitigation against damages, which could mean fewer jobs affected. Things like reporting and analysis of data take so much time when done manually, and there are things in the data even the best analysts might miss. If this were done via AI, the takeaway could be that much more telling and can lead to innovations we have yet to ponder.” – Daniel WesleyCredit Loan, LLC

Read the full article at forbes.com

Millennials Main Users Of Alternative Data

Ignore the hype and focus on machine learning objectives, say buy-side tech experts

Advancements in machine learning and artificial intelligence (AI) may be improving trading strategies, but at the cost of transparency and interpretability, according to panellists at this TradeTech FX Europe.
Ian McWilliams, investment analyst at Aberdeen Asset Management, detailed how the understanding of what machine learning technologies are capable of is being distorted by a lack of understanding and exaggeration.

“I joke that when you are advertising externally you say AI, but inside you say machine learning and actually you are just doing logistic regression and things like that,” he said. “I don’t think that’s disingenuous, maybe it’s a bit of hyperbole, but it’s not wrong in terms of definitions, because when we talk about machine learning it really is anything where you are getting an algorithm to learn from data.”

“We’re taking a lot of market signals and sentiment signals, forecasting what markets are going to do in the future and using those to build trading strategies.”

McWilliams explained that the hype around elements of machine learning such as deep learning, image recognition and natural language processing (NLP) are distorting expectations around what are essentially tools to better model data for trading strategy decisions, particularly when it comes to conversations with fund managers.

“The interesting thing we need to think about as an industry and maybe where attitudes need to change is around interpretability of the models, which is a big question in a lot of areas, not just finance,” he said.

“Whenever we come out with a trade a question we get asked by the traditional fund managers is ‘Why is it making that trade?’ and they generally expect a very causal, A to B explanation, but that often defeats the point of these very complex algorithms. The middle ground is not good enough to just say that the algorithm says to do it, so we are doing it, but there needs to be more conversation between the quant people and more traditional people to understand there is a trade-off there.”

Saeed Amen, founder of trading consultancy Cuemacro and veteran of developed systematic trading strategies for Lehman Brothers and Nomura, extolled the virtues of simplicity when approaching the adoption of trading strategies based on machine learning technologies.

“The question to ask when you are thinking about using machine learning is: What are you trying to achieve, and can you use logistic regression or linear regression, for example, as sufficient for your task?” Amen said. “I would always try to go for the simplest tool necessary. There needs to be a rationale for the complexity involved in the trading strategy.”

Originally published September 13, 2018 by Thetradenews.com

SEC Seeks Software To Monitor Market-Moving Social-Media Posts

The SEC is seeking bids for a software tool that points out important and market moving social media posts.

While astute and savvy traders have known about the market moving power of social media for years now – many independent research shops, bloggers and company executives use Twitter frequently – it seems that only now is the Securities and Exchange Commission getting hip to social media’s close relationship with the stock market.

According to this write up at NextGov, the SEC is seeking a “out-of-the-box tool” that can monitor and flag posts that may have an effect on the financial markets. The description notes what the SEC is looking for:

“…a complete, web-based tool to scrape the major sites for keywords on relevant topics. When a keyword pops, the tool should send an email alerting the appropriate SEC staff.”

Last Thursday, the SEC issued a solicitation for such a tool. They reportedly wanted to spend under $27.5 million for a “finished product ready to use”. The article importantly pointed out that the SEC is “…NOT seeking sources for development of a new solution or customization of a product to acquire/add the required capabilities,” but rather it appears that they are seeking a finished product.

Of course, the most recent prominent example of social media having an effect on the stock market was Elon Musk’s famous go private Tweet, where he proclaimed that the company had “funding secured” for a bid to take itself private at $420 per share.

We reported last month that the SEC was probing whether or not Musk lied in his market moving Tweet.

“…the SEC has inquired with Tesla about Elon Musk’s announcement that he may take the company private ‘and whether his claim was factual’,” we stated last month.

The regulator also wanted to know why the disclosure, which kept people glued to Twitter for hours, was made on the social network rather than in a regulatory filing, and whether the firm believes the announcement complies with investor-protection rules.

The SEC is still in the midst of a formal investigation of Tesla, but it’s easy to make the assumption that this occurrence may be what has prompted this new software contract solicitation.

Nextgov.com pointed out that bid proposals for this solution were due to the SEC by 2PM on September 11.

Originally published by Zero Hedge Tue, 09/11/2018 – 20:25

Gold mine, or minefield? – Risk.net

“Global exchanges make millions of dollars packaging data about deals taking place across their markets. Data and related services made up a fifth of total exchange revenues last year – the second largest revenue generator behind trading, clearing and settlement services.”

 

Read the full article at: Risk.net

Wall Street, Hedge Funds Add Social Media to Research Menu

Wall Street is taking another step toward making social media as core to investment research as quarterly sales reports.

M Science LLC, which sells alternative data research to big hedge funds, said last week that it is acquiring TickerTags Inc., a social-media tracking firm startup based in Dallas.

Investment managers are increasingly looking to use technology to generate new trading ideas. Hedge funds in the U.S. and Europe now spend more than $170 million annually on so-called alternative data, according to a survey by Greenwich Associates.

Though small, this deal announced Friday is the latest in a string of consolidation among new financial data providers. Advanced Publications Inc. acquired 1010data, an alternative data provider, for $500 million in 2015. Kensho Technologies, which applies artificial intelligence to stock research, announced this year that it would be bought by S&P Global Inc. for $550 million.

M Science, which didn’t disclose terms of its latest purchase, is among the largest and oldest providers of alternative data reports to Wall Street, publishing company-specific notes based on Information such as purchase data, mobile app usage and web surveys of prices.

The business began as Majestic Research in 2002, before being acquired by Investment Technology Group Inc., and then by Jefferies Financial Group Inc. in 2016. M Science now has 115 employees, more than double the number in 2016.

So far, alternative data has mostly been based on things directly relevant to forecasting sales, including credit-card receipts and tracking the number of customers visiting a business, such as with satellite images of parking lots.

Startups like TickerTags have emerged to mine Twitter and other social media for a variety of signals, including news about public companies.PHOTO: RICHARD DREW/ASSOCIATED PRESS

More recently, a number of startups, such as TickerTags, Dataminr and iSentiumhave emerged to mine Twitter Inc. and other social media for a variety of signals, including news about public companies. Some firms and investors also measure market sentiment through social media.

Now forms of social monitoring are being directly integrated into research products already consumed by Wall Street. Goldman Sachs Group Inc., for example, sometimes includes measures of Twitter mentions in stock research reports.

TickerTags has compiled more than a million key words and phrases and mapped them to public companies for which they are relevant. It then monitors online discussions, including Google search terms, for those key words.

TickerTags hasn’t yet taken off as a product sold directly to funds. But Michael Marrale, chief executive at M Science, said that clients had asked him about trying to find a way to integrate the TickerTags system into M Science’s own data and reports on public and private companies.

Data is just a small part of the equation, said Mr. Marrale. “It’s how you map that data to public and private companies in ways you didn’t anticipate.”

For example, Newell Brands Inc.’s shares soared in May 2017 after it reported unusually strong sales of Elmer’s glue. The product is a key ingredient in slime, a gooey homemade toy that surged in social-media popularity last year.

TickerTags co-founder Chris Camillo said that the company’s system noticed a surge in the mention of “slime” in April, because it was often paired with mention of “Elmer’s,” and also “sold out,” all of which had been tagged as relevant to Newell stock.

Originally published June 4, 2018 by THE WALL STREET JOURNAL.