Nasdaq has continued its dive into the data-provider realm with the acquisition of alternative-data provider Quandl, highlighting growing interest from hedge funds for obscure data that could give them an investing edge.
The exchange said on Tuesday that it had acquired Toronto-based Quandl for an undisclosed sum and would merge it with its own alternative- and financial-data platform, though the Quandl brand will remain.
The move comes as Nasdaq and other big exchanges are bulking up in areas like data and analytics and moving away from bread-and-butter listings and trading business, which are lower-margin investments.
In 2017, Nasdaq spent about $700 million to buy traditional-data provider eVestment.
Read more: Nasdaq is shaking up one of its legacy units
Quandl, which pulls datasets from nontraditional sources, like corporate aircraft leases, to predict mergers-and-acquisitions deals, said it's used by eight of the 10 largest hedge funds and 14 of the 15 largest banks.
"We kept hearing one name when we were looking at alternative-data providers from the industry, and that was Quandl," Bjørn Sibbern, Nasdaq's head of global information services, told Business Insider.
Quandl will keep its brand as part of the deal, and Quandl CEO Tammer Kamel will continue to lead the team. Nasdaq, Kamel said, gives his young company a "bedrock" to work off of.
"We go out into the wilderness and knock on doors, looking for data that Wall Street would have never seen," Kamel said.
Spending on alternative data is expected to surpass $7 billion by 2020, according to Deloitte. There are roughly 375 alternative-data providers in the industry, according to AlternativeData.org.
Other alternative-data providers offer satellite imagery of shopping-mall parking lots, credit card transactions, and location-based mobile tracking. Hedge funds and asset managers use the data to make smarter investing decisions.
