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Selling Data to Hedge Funds (2017)

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Re: Selling Data to Hedge Funds (2017)

#21

Post by ed25519FUUU »

elevenoh wrote: post #11
logicslave wrote: post #9

Honestly if you have a predictive data set, most likely it is more profitable to use it to invest yourself than it is to sell it. Its like a successful startup raising VC funding, the good ones dont need the investors, the bad ones do. Source is I used to work in this space. Clearly there are operational difficulties to investing and serious domain knowledge but if you have data with alpha, its worth insane amounts o…

True. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collecting that you're not* selling?"

If the data made a few dollars per thousand dollars traded, it would take you a long time to make meaningful income from it, as opposed to a market maker.

Re: Selling Data to Hedge Funds (2017)

#22

Post by AznHisoka »

elevenoh wrote: post #11
logicslave wrote: post #9

Honestly if you have a predictive data set, most likely it is more profitable to use it to invest yourself than it is to sell it. Its like a successful startup raising VC funding, the good ones dont need the investors, the bad ones do. Source is I used to work in this space. Clearly there are operational difficulties to investing and serious domain knowledge but if you have data with alpha, its worth insane amounts o…

True. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collecting that you're not* selling?"

Because sometimes the data is useful when combined with other data you might not have yourself. Example: you have data on number of Netflix subs. That’s great. It would be even more useful if you combine that with Netflix churn data.

You can think of company analysis as a jigsaw puzzle. You may have a few pieces. That by itself isn’t useful unless u have the other pieces.

Re: Selling Data to Hedge Funds (2017)

#23

Post by crb002 »

threedots wrote: post #4

I run a business in this space. Realistically your chances of having data that is useful to a HF (of any kind) is pretty low so I wouldn't bank on it as a revenue source unless you have a strong reason to believe (1) your data is predictive of something an investor cares about and (2) isn't already covered by other data.

Trying to get my credit union to allow users to opt in to sell bulk annon checking account transactions to a hedge fund. Having that much point of sale data would be huge.

Re: Selling Data to Hedge Funds (2017)

#24

Post by whatok »

AznHisoka wrote: post #22
elevenoh wrote: post #11

Earlier quoted context omitted.

True. I'd ask: "If this data is truly useful in a financial market context, why are you selling it instead investing with it yourself? What data are you collecting that you're not* selling?"

Because sometimes the data is useful when combined with other data you might not have yourself. Example: you have data on number of Netflix subs. That’s great. It would be even more useful if you combine that with Netflix churn data. You can think of company analysis as a jigsaw puzzle. You may have a few pieces. That by itself isn’t useful unless u have the other pieces.

What you're saying is correct but also puts a non-sophisticated seller in a poor negotiating position. They do not know what existing data the buyer uses or how their data can be complementary to anything.

Re: Selling Data to Hedge Funds (2017)

#25

Post by ethbr0 »

whatok wrote: post #24
AznHisoka wrote: post #22

Earlier quoted context omitted.

Because sometimes the data is useful when combined with other data you might not have yourself. Example: you have data on number of Netflix subs. That’s great. It would be even more useful if you combine that with Netflix churn data. You can think of company analysis as a jigsaw puzzle. You may have a few pieces. That by itself isn’t useful unless u have the other pieces.

What you're saying is correct but also puts a non-sophisticated seller in a poor negotiating position. They do not know what existing data the buyer uses or how their data can be complementary to anything.

That's why start-high and walk away is a fair opening gambit in negotiations of this sort.

You can always come back around, but if they pursue you, that tells you something about their appetite.

Re: Selling Data to Hedge Funds (2017)

#26

Post by whatok »

ethbr0 wrote: post #25
whatok wrote: post #24

Earlier quoted context omitted.

What you're saying is correct but also puts a non-sophisticated seller in a poor negotiating position. They do not know what existing data the buyer uses or how their data can be complementary to anything.

That's why start-high and walk away is a fair opening gambit in negotiations of this sort. You can always come back around, but if they pursue you, that tells you something about their appetite.

I mean, I guess that's something that you can do but it's likely to get you laughed out of the room and greatly encourage them to reverse engineer whatever you were trying to sell.

Re: Selling Data to Hedge Funds (2017)

#27

Post by neolog »

fractionalhare wrote: post #13
r_singh wrote: post #8

Earlier quoted context omitted.

Could I send you a sample? I’m curious about certain data I’m scraping for a project.

If you shoot me an email I can tell you very quickly if it's viable, and direct you to specific people at firms who would buy it. I probably don't need a sample if you give an honest description of it.

Is it better to provide the raw data, or to instead provide some interesting statistics from aggregating or running a model on the data?

Re: Selling Data to Hedge Funds (2017)

#28

Post by scottydelta »

I recently published a data dashboard(https://public.quantale.io/dashboards/50778f4a-02bb-4d31-b6e...) using Quantale[1] to show the correlation between Tweet activity of a stock vs the price during the recent stock split of Tesla and Apple.

While I believe there are softwares that can collect such data which can definitely be useful to hedge funds but at the same time we should note that the data available to general public is most probably something these hedge funds already have since they have spent years developing systems to gather and analyze data to stay ahead of the curve.

[1] Quantale (https://quantale.io/) is a data collection and analytics platform my company is developing.

Re: Selling Data to Hedge Funds (2017)

#29

Post by Closi »

logicslave wrote: post #9

Honestly if you have a predictive data set, most likely it is more profitable to use it to invest yourself than it is to sell it. Its like a successful startup raising VC funding, the good ones dont need the investors, the bad ones do. Source is I used to work in this space. Clearly there are operational difficulties to investing and serious domain knowledge but if you have data with alpha, its worth insane amounts o…

Surely a hedge fund has three advantages compared to investing yourself:

* Higher amounts of money to invest immediately, so they can better capitalise on the data quickly.

* Balance investment risk over many different assets - they can take a higher degree of risk/reward as any single failure in investment is unlikely to topple them

* Combine multiple data sets with other trading strategies to maximise returns.

Re: Selling Data to Hedge Funds (2017)

#30

Post by logicslave »

fractionalhare wrote: post #12
logicslave wrote: post #9

Honestly if you have a predictive data set, most likely it is more profitable to use it to invest yourself than it is to sell it. Its like a successful startup raising VC funding, the good ones dont need the investors, the bad ones do. Source is I used to work in this space. Clearly there are operational difficulties to investing and serious domain knowledge but if you have data with alpha, its worth insane amounts o…

I disagree. Sell-side research using so-called alternative data is a different skillset from trading and buy-side research. Some datasets comprise sufficient alpha in of themselves to trade on, some datasets have some edge (i.e. are not yet priced in) but require more sophisticated analysis. Good data is necessary but insufficient for developing viable trading strategies. Source: Also used to work in this space. Stil…

I used to work in buy side research. Most of the good datasets have already been stripped of alpha, but are bought and sold anyways because funds have to know what the data is saying to keep up with the other funds. A true new dataset with separate alpha is a goldmine. There are ones that add to the edge, and require quants, but in my experience all the valuable alternative data can be normalized and then back tested to the stock price. If you cant do that with it, its not that valuable outside a few hedge funds.
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