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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

#221

Post by sib »

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.

Completely agree. My point is only that there's no real argument here that this is "non-public information," which is what insider trading laws are about.

Re: Hedge funds use satellite images to beat Wall Street

#223

Post by hermitdev »

logifail wrote: post #170
tryptophan wrote: post #160

Earlier quoted context omitted.

This is called front running and is super illegal.

> This is called front running and is super illegal. Are you sure it's illegal if it's a hedge fund with access to order flow from a third party? "Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal fo…

Yes. Acting upon material, non-public information, is the very definition of insider trading. It does not matter where the information originates.

It's only profitable if you dont get caught. SEC will make a very expensive and public example if they catch you.

Source: +15 years in the industry, a number of which have been spent working in/with compliance.

Re: Hedge funds use satellite images to beat Wall Street

#224

Post by Phillipharryt »

hermitdev wrote: post #223
logifail wrote: post #170

Earlier quoted context omitted.

> This is called front running and is super illegal. Are you sure it's illegal if it's a hedge fund with access to order flow from a third party? "Front running is one of the easiest ways to make money. It's essentially insider trading, except the inside information isn't about corporate activity; the information is about client order flow. In this case, since the index investors are not their clients, it is legal fo…

Yes. Acting upon material, non-public information, is the very definition of insider trading. It does not matter where the information originates. It's only profitable if you dont get caught. SEC will make a very expensive and public example if they catch you. Source: +15 years in the industry, a number of which have been spent working in/with compliance.

But you can front-run using public information. Large orders are broken up and with sufficient analysis and prediction you can front-run a portion of them.

Re: Hedge funds use satellite images to beat Wall Street

#225

Post by csteubs »

jrochkind1 wrote: post #154
pmarreck wrote: post #150

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 peopl…

Why would drones be cheaper than satellite photos? If they were, wouldn't the hedge funds already be doing that instead? They clearly seem not to me. The issue, if there is one, is that it is not cheap to get this data on a large enough scale to be useful. I suppose it's possible a sampling of just a few parking lots would be representative enough to be useful? In which case you don't need drones, you can just go to…

You're correct that drones are more expensive than satellite imagery at scale--I'm currently working on a startup in this space that cuts the cost of imaging by between 100x and 10,000x depending on the target location.

Re: Hedge funds use satellite images to beat Wall Street

#226

Post by ISL »

logifail wrote: post #158
ISL wrote: post #25

As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. We should not aspire to drag hedge-fund research down to the Main Street level. If there is a place for government in this context, it is to fund the education necessary to help retail investors learn a) how to take ben…

> As an occasional retail trader, it doesn't bother me at all that other market participants are trying to be better informed. In fact, it means that market prices are more likely to be properly-priced. What about companies that find out about your retail trade before it's even executed , and are able to act on that information to profit from your very intent to trade?

Front-running is fine with me. It I place a limit order that says I'll buy a pizza for $10 or less, and someone can buy that pizza for $8 and sell it to me for $10, I'm a happy buyer -- I'll expect to get at least $10 of utility out of that pizza. Without funding the market-makers, there may be no market....

Re: Hedge funds use satellite images to beat Wall Street

#227

Post by atemerev »

stevenhuang wrote: post #202
atemerev wrote: post #106

Earlier quoted context omitted.

Technology does level the playing field. As a software engineer, I can get access to realtime institutional-grade data and write strategies that were impossible even a few years before. Not even speaking about crypto exchanges, where all data is public.

> As a software engineer, I can get access to realtime institutional-grade data One can get API access just like that? If so then I'm interested, might be fun to dabble with--can you name some of these providers?

IEX API, for example.

Re: Hedge funds use satellite images to beat Wall Street

#228

Post by drited »

throwaway2048 wrote: post #184
Nelson69 wrote: post #63

Earlier quoted context omitted.

It's as old as time... Eamon Javers' book Broker, Trader, Lawyer, Spy covers some cases of this sort of thing. One I can easily remember is a hedge fund flew private planes around taking areal photos near power plants. Coal fire power plants store their fuel out in the open and they buy it by the train-load, so they were able to time the market based upon when power plants were going to make large coal purchases, as…

There is a (likely apocryphal) story that when Galileo presented the Doge of Venice with his first telescope, he took him aside privately and they went to the tallest tower in Venice to spy on the incoming trade vessels, then rushed down to the market and proceeded to make a killing on the knowledge of when exactly cargo would be arriving.

And another about how the Rothchilds had a better messaging system (flags? Burning pyres? Pigeons?) after the of the battle of Waterloo and traded British Government bonds on the London exchange after the win (first openly selling to head fake the market which knew of their messaging time advantage and then buying through nominees in the ensuing panic)

Re: Hedge funds use satellite images to beat Wall Street

#229

Post by gingabriska »

shitgoose wrote: post #219
logifail wrote: post #191

Earlier quoted context omitted.

> These HFs are just providing liquidity and "charging" a small fee for doing so HF traders provide liquidity and market-making when it suits them. Doesn't that stop when it doesn't?

People rarely do something that doesn't suite them:) What is the point?

This hangs on an assumption that people are rational, they are not.

Re: Hedge funds use satellite images to beat Wall Street

#230

Post by keiru »

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.

So snooping on your neighbour gets more morally sound the higher your ladder is?
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