How to use alternative data for investing?

The aim of every investor is not only to beat inflation but, most importantly, to beat the market and thus to generate Alpha. Traditional data, such as financial statements, SEC filings, or press releases, is read by all investors around the world. Therefore, to generate Alpha investors must look for new signals that will give them an edge over their competitors.

What is alternative data?

Nontraditional data sets, termed alternative data, can give investors a fuller picture of an investment opportunity. So, what is alternative data? This includes, for instance, social media sentiment, web traffic, mobile application usage, product reviews, satellite imagery, credit card transactions, email receipts, and so forth. Using alternative data, investors can get a distinct advantage consisting in access to valuable information about the behavior of customers, as well as future customers, and thus can better predict business trends.

What are the benefits of alternative data?

Real-time information enables investors to have a more accurate perception of a chosen company’s business performance. Basically, investors need not wait only for the quarterly financial results to see how the company is doing. They can monitor the company on a frequent basis to determine whether it is or is not getting more customers. Additionally, when used in conjunction with traditional data, investors can more accurately predict long-term results.

What do we do for you to deliver relevant data?

Every company is different, and therefore our team of analysts puts each one through a thorough analysis and defines in our database what data is relevant for each and every one of them. For example, data from website traffic is very important for companies such as Booking.com (BKNG) or Shopify (SHOP), because these two companies sell their products online. On the other hand, data from website traffic makes no sense for a company such as Plug Power (PLUG), which provides hydrogen fuel cell turnkey solutions for electric mobility.

Additionally, most companies today have their own mobile applications, but not every mobile application provides valuable insight for investors. For instance, data from the XBOX mobile application (MSFT) provides a great way to discover how well the XBOX has been selling in the last couple of months. On the other hand, a mobile application that has been downloaded only a few times, has not been updated for the past two or more years, or has been developed only for employees of the particular company does not bring any relevant information for investors. Therefore, you will not find such apps in our database.

How does our “background” work?

Once we specify and analyze this selected data, we insert it into our database. After that our systems continuously control this data in real time and update it as needed. If a change occurs, such as a move up or down in mobile app ranking or a new patent has been released, then you will get immediate notification in your Smart Feed. Isn’t that cool? 😉

That means you would find out the information about rising sales figures sooner than most of your peers. Or when a company has just been issued a new patent, that means it has been innovating its products. Isn't it great to be among the first to find out this information?

What alternative data can you find on strike.market?

Website traffic

This shows the number of visits to a particular website, thereby indicating if a website (company or product) is attracting more customers or, on the other hand, the customers are losing interest. See the example of the website traffic for Victoria's Secret in the last couple of months. (VSCO)

Mobile applications

Similar to website traffic, mobile application ranking also shows customers’ interest in products or services at companies offering their services or products mainly through a mobile application, such as Spotify or Uber. The mobile application usage represents the real-time interest of its customers. See the example of the mobile application of Spotify. (SPOT)

Social media

Facebook and Instagram are great marketing tools and selling channels for companies, and especially those that sell fashion, cosmetics, food or travel. Therefore, closely watching the numbers of followers on Instagram and the likes on Facebook shows you the sentiment for the brands. See the example of NIKE. (NKE)

Google Trends

This shows you if your chosen company is searched on Google more than are its competitors. If yes, then you can see whether the company is gaining more attention over its competitors or not. Look at the example of Shake Shack (SHAK) in comparison to Five Guys and In-N-Out. (SHAK)

Job openings and number of employees

The number of job openings and number of employees can indicate whether a company is planning to expand or, on the contrary, is about to withdraw from some markets. See the example of Palantir. (PLTR)

Patents

Patents give companies the right to stop competitors from copying, manufacturing, selling, or importing inventions without their permission. Also, patents increase the valuation of a company. The more patents the company owns the more valuable it can be. See the example of Nokia (NOK) and its patents. (NOK)

Insider trading

The famous Fidelity Investments manager Peter Lynch once said, "Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.” Therefore, it is essential to watch whether the insiders are buying or selling their shares to predict the trend of the company. See the graph of GoPro. (GPRO)

Share of Search

This data shows the number of organic searches a company has received as a proportion of the total number of searches made for every selected company in its industry. See the Share of Search for the best-selling EV. (TSLA)

Do you want to learn precisely how to use the data you find on strike.market for your investments? Then stay tuned and read our articles, as these can prepare you in depth.