After a rocky year for hedge funds, managers — especially in the stock-picking space — are under more pressure than ever to find unique datasets that will give them an edge.
Nearly four out of every five hedge funds use alternative data, according to a November 2017 report by EY. The most popular data providers and data streams, like credit-card-spending numbers, have become table stakes.
Now, 1010data, an alternative-data provider used by dozens of hedge funds, has rolled out a new, comprehensive customer-transaction database that combines a number of different data sets.
Using a combination of credit-card-spending data, website-traffic numbers, and cell-phone-geolocation info, 1010data's TickerView Visits database tracks what more than 25 million consumers are spending their money on.
For example, a hedge-fund analyst tracking a brick-and-mortar retailer can determine how many customers are buying online versus shopping in person, as well as what time of the day they are coming into the store and for how long.
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The new conglomerate of data is helpful for hedge funds and other managers tracking retail companies because a single data set does not always tell the full story, said Andy Mantis, senior vice president of 1010data.
"If you're a cash-centric business, then credit- and debit-card data will only capture a part of that," Mantis said. The geolocation data 1010data uses, he said, can break down how many people are buying products online but picking up in store — a figure that website traffic alone would not be able to tell you.
2018 was one the worst years for hedge funds in 20 years, and the alternative-data space is primed to explode as managers become desperate to justify their fees, industry experts say. IBM found in a 2018 report that 90% of alternative data sets available to purchase today have been created in the last two years, and AlternativeData.org puts the industry at roughly 375 providers.
And more established data providers have made moves to defend their turf against newcomers. Nasdaq, for example, acquired alternative-data providers Quandl and eVestment in the last two years.
JPMorgan estimates that asset managers are collectively spending $2 billion to $3 billion annually on such data and that spending will grow 10% to 20% each year.
