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Hedge funds use satellite images to beat Wall Street

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Re: Hedge funds use satellite images to beat Wall Street

#141

Post by blihp »

bluGill wrote: post #23

Nothing new here other than satellites. Years ago (1990s?) Peter Lynch - at the time manager of the largest mutual fund followed his daughters into a shopping mall for back to school - his daughters didn't go into GAP stores so he went back to the office and sold as his shared of GAP. His fund beat everyone else by a large margin because GAP stocks dropped a month latter when they announced the earnings drop. This is…

Was going to make the same comment. I remember Peter talking about how he used foot traffic at the mall to size up retailers he was looking at back in the early 90's. These were interviews on channels like CNBC, so pretty widely watched by retail investors.

All the satellites do is automate the work and I'm pretty sure hedge funds have been using satellite pics for well over a decade now. (I recall reading about the parking lot use case pre-2010) So really all that's changed is that they're now using ML to automate most of the work that analysts used to do manually.

Re: Hedge funds use satellite images to beat Wall Street

#142

Post by scarejunba »

davidw wrote: post #49
vostok wrote: post #29

Earlier quoted context omitted.

This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.

I agree, but where's this end up? Why would retail investors play a game where they're almost certain to lose?

Because retail investors will beat the hedge funds by dumb spending on index funds.

Re: Hedge funds use satellite images to beat Wall Street

#143

Post by dinkudunk »

vostok wrote: post #29
harryh wrote: post #12

This article is very wrong to confuse "material non-public information" with hard to acquire information like counting cars in satellite photos. Remember the Matt Levine test: insider trading is about theft, not fairness. When a company insider uses private company information to trade (or colludes with an outside party to do so) they are stealing material non-public information from the company for their own benefit…

This is exactly right. If you're upset about this then you should be upset that hedge funds can afford to hire smarter analysts than you, which is just silly.

Does this feel like a straw man to anyone else?

Re: Hedge funds use satellite images to beat Wall Street

#144

Post by smountjoy »

whymsicalburito wrote: post #112
sib wrote: post #79

Something that is visible from space - the number of cars in a parking lot - seems to be the very antithesis of "non-public" information. I think Berkeley missed the thread on this one.

Yes, but it's not like the cars are ONLY visible from space. You are welcome to organize a large group of people to travel around to parking lots and count cars and then privately share your findings. What the funds are doing is just a more efficient version of that. It's all public information.

OP agrees with you: antithesis of non-public = public.

Re: Hedge funds use satellite images to beat Wall Street

#145

Post by Dylan16807 »

lapnitnelav wrote: post #135
autokad wrote: post #124

Earlier quoted context omitted.

> "At best, retail investors are simply gambling." that's just not true and is a gross over simplification. for one, not beating the market is NOOOOOT the same as losing money. For another, even if they do not beat the market, there are a lot of other benefits. People gain an understanding of how things like bonds and equities work. I cant tell you how many people (masters degree included) think you can loose more mo…

>When someone says lets eat out at this expensive 150$ plate restaurant, I think gee I can buy X shares of Y stock instead. Nothing wrong with being investment savvy and all that jazz but obsessing over it doesn't sound healthy. People can enjoy a fancy plate or 2.

Enjoying things is fine, but as someone without "fuck you money", 90% of the time I'd get more enjoyment out of a $20 plate and the ability to retire a day earlier.

Re: Hedge funds use satellite images to beat Wall Street

#146

Post by knd775 »

floatrock wrote: post #31
waterside81 wrote: post #14

There's a whole marketplace where companies with so-called "Alternative-data" sell their datasets to quant traders. Satellite imagery of farms, passenger traffic through airports, all sorts of random, seemingly disparate data.

The reason your free weather app asks for your location data isn't for "local weather forecasts". Well, it is, but that's a cost for them. The income comes from keeping that location tracking on all the time and selling which stores and dentists you go to. Someone can link the NYT story from a few months ago when this came to mainstream attention. Hedge funds also fly cesnas over refinery fields to look at the levels…

Some employees of a credit card company got in trouble for this sort of thing a while ago. They were running queries against customer transactions to figure out sales ahead of earnings calls. For example, they figured out that Chipotle was going to beat expectations and bought a ton of stock just before the earnings call. (This very predictably got the attention of the SEC)

Re: Hedge funds use satellite images to beat Wall Street

#147

Post by hnburnsy »

This was a better story from 2016 on how they are deploying the satellites...

"A company called Planet Labs Inc. has launched a small constellation of what it calls “cubesats” that can deliver much more frequent imagery of economically sensitive spots than traditional satellites. Those spots include retailers’ parking lots, oil-storage tanks or farmland"

https://www.wsj.com/articles/satellites-hedge-funds-eye-in-t...

Re: Hedge funds use satellite images to beat Wall Street

#148

Post by totaldude87 »

I think i saw the same thing in the showtime series "Billions"? where Taylor uses this information , thought this is another level of technical analysis :)

Moral ethics aside, this looks legal?!, even if the shorts tank shares based on images of car parking lots..

Re: Hedge funds use satellite images to beat Wall Street

#149

Post by goodfight »

anonu wrote: post #136

They've been using satellites for over a decade now. The fact that you're hearing about it means there's not much value in this type of data anymore.... I reserve some room for being wrong here. This type of data is ultimately used to predict revenue for consumer companies. Cellphone data and wifi data is much better for that type of prédiction.

The information about the state of hedge funds takes time to travel, anyone that has been in the quant field knows about these practices. Now that data science and machine learning are becoming more accessible to the public, I'm not surprised that articles are being made on it. There is value in this data now that we have better data processing abilities. There was less technical value in the past and now there is less competitive value in the present.

Re: Hedge funds use satellite images to beat Wall Street

#150

Post by pmarreck »

This was apparently a plot point in Billions.

There's market opportunity here. Off the top of my head:

1) Drone photos instead of satellite photos to get at the data cheaper

2) ML counting of cars

3) Some way to legally sense the number of cellphones within a given radius (can possibly be combined with a drone)

4) Simply aiming a network cam at the entrance/exit from across the street and counting the number of people that enter and exit via ML

All of these could get you at public data that highly correlates with retail sales

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