Everyday traders are credited with a revolution on Wall Street, which helps take advantage of the actions of GameStop Corp. GME,
and AMC Entertainment Holdings AMC,
and razing the base segment of the hedge fund industry in the process.
Now, a group of data providers are betting that financial markets will never be the same again and that investors with big pockets will spend big money to monitor discussions on message boards like Reddit’s r / wallstreetbets and networking platforms. social like Discord for mentions of listed companies.
“We believe this is a kind of moment of division and perhaps irreversible,” Boris Spiwak, marketing director of alternative data firm Thinknum told MarketWatch in an interview Monday. Thinknum’s plans were mentioned in a Barrron article over the weekend.
Spiwak said he envisions customers using the services of companies like Thinknum as a way to benefit not only from talks on social media platforms, but also as a form of crisis management, as meetings of Individual investors gather on platforms to focus on investment ideas. .
“This is very new and we see it as a crisis management purchase, as an insurance policy and a way to increase returns and minimize losses,” he said for customers.
The Thinknum service, which launched last week, is one of the most expensive it offers to customers, costing just under $ 25,000 a year, to track the number of times companies are listed on the stock exchange of New York and those of the Nasdaq. on sites like r / wallstreetbets or other Reddit subreddits.
“Demand has been massive: in recent days we have received more than 100 incoming requests for hedge funds,” wrote the marketing director at Thinknum.
So far, interest in these expensive products comes from fund managers, but the company says it is also sending inquiries from institutional investors looking for “an insurance policy to protect itself from Reddit.”
The company’s alternative data moves come as video game retailer GameStop and other companies, such as film chain AMC Entertainment and headset maker Koss Corp. KOSS,
they have experienced a parabolic accumulation of stock values over a short period of time, as investors congregating on sites like Reddit’s r / wallstreetbets, poured millions into very short companies to trigger a rebound in those stocks.
The recent advance in very short stocks led by the army of individual investors seemed to cause pain to hedge funds.
Melvin Capital Management, one of the hedge funds that was seen at the center of GameStop’s problem, lost 53 percent of its investments in January, The Wall Street Journal wrote, citing acquaintances. WSJ also said another hedge fund Maplelane Capital ended January with a loss of approximately 45%.
Meanwhile, Andrew Left, founder of Citron Research, last Friday, a famous short salesman, changed his strategy and said his company would no longer publish short sale reports. Left was seen drawing the wrath of individual investors for his negative views on GameStop, a brick-and-mortar retailer that he said was worth just about $ 20 amid a growing shift in digital video game sales.
“Young people want to buy shares. That’s the phenomenon, ”Left said of his decision to stop the business from identifying companies he believes are overvalued and publicly announcing that he would bet his shares would collapse.
“They don’t want short stocks, so I’ll help them buy stocks,” Left said of his focus on long investment.
Other companies, including SimilarWeb, are also trying to promote tools for investors to track investment and discussions on popular social networking sites and on some of the most popular trading platforms.
SimilarWeb says that, for example, you can track stock exchange symbol searches between mobile app users and desktop users on the Robinhood Markets platform. SimilarWeb claims that search activity can be indicative of actual trading and can help clients identify trends early, according to Ed Lavery, director of solutions for similarWeb investors.
SimilarWeb
SESAMm, which presents itself as one of the leading providers of analysis and artificial intelligence for investment professionals, had also developed or worked on services that could help identify social media trends, Spiwak said.
SESAMm, which recently raised some $ 7.5 million in venture capital funding from NewAlpha Asset Management and global investment firm The Carlyle Group, did not immediately return any emails for comment.
Meanwhile, the liquidation of profitable long positions by hedge funds and other investors who needed cash to hedge losses due to the loss of short positions has been blamed on the DIA Jones Industrial Average DJIA,
the S&P 500 SPX index,
and the Nasdaq Composite Index COMP,
recording its worst weekly losses since last Friday’s October.
Markets were trying to make up for those losses early Monday and started what would likely be a turbulent February.