March 25, 2013

Are non-traditional data sets part of your research?

by Stephen Malinak

For the hedge fund community, we have a broad range of data across major categories including macroeconomics data, text mining, insider, short interest, ownership, options, and industry-specific data that frankly should be used more. We see time and time again that outperformance demands breaking away from the most readily available, commoditized data and measures that everyone else uses. It’s critical to consider these untraditional and underutilized data sets in your research.

One of the many examples that jump out at me is our Smart Holdings model based on this ownership content, showing how to derive alpha from a data set that many people have struggled to use effectively. We take a very novel approach and analyze the buying and selling behavior of funds to determine what styles and security characteristics are in favor at a given point in time. Thomson Reuters ownership content is the industry-standard for depth and breadth of security, mutual fund, and investor coverage spanning more than 500,000 owners, 45,000 funds across over 70 countries.

Issues such as climate change, executive remuneration and employee rights are becoming as important as traditional metrics, that’s why having access to an objective and comparable database and analysis tools is key. Our ASSET4 provides objective environmental, social and governance (ESG) information based on 250+ key performance indicators (KPIs).

Thanks to our vast Legal, Patent and Life Science databases, we know exactly where any given drug is in the FDA approval pipeline. That can have a huge impact on how the stock of a small pharma or biotech company that’s dependent on those drugs performs. We’re also expanding our estimates database to include many more industry-specific indicators in the banking, insurance, and energy industries. With traditional quant factors and classic company-level fundamental analysis, you would never get this kind of critical insight. This is a great example of how our vast data resources can give you a distinct advantage.

To learn more about how our unmatched depth and breadth of content, analytics and tools can help you outperform, contact our Hedge Fund team.