Eagle Alpha White Paper

| White Paper
Discovering The Web’s
Hidden Alpha
How the buyside can make full use of
online information
June 2014
White Paper - Discovering The Web’s Hidden Alpha
Eagle Alpha How the buyside can make full use of online information
Table of Contents
Introduction p.3
The web events that have grabbed Wall Street’s attention p.4
Examples of buyside investors already unlocking value of the web p.9
How the buyside are leveraging the web today p.13
10 Examples of how the buyside will leverage the web p.24
The Eagle Alpha solution p.28
www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 2

Introduction
Wall Street has been hesitant to adopt the web as a

source of information despite an emerging awareness
of the value it represents. This is primarily due to the
significant amount of noise on the web and compliance
concerns.
Massive amounts of data are being generated every

minute, as we see in this infographic, and the pace of
data creation is accelerating. In fact, an IDC Digital
Universe study finds that the world’s information
doubles about every year and a half1. While the vast
majority of web content is noise, signals are being
found if technology and research analysts are utilized
in the right way.
In addition to this, the majority of Wall Street firms

prevent their employees from accessing highly
valuable areas of the web like forums and social media
for compliance reasons; these sites are not read-only
and there is a data storage requirement of 5 years
but Twitter and other social media do not offer this
functionality.
That said, the web is fast becoming an essential

component of the investment process for a wide
range of investors on the buyside. Hedge funds, asset
managers, banks, trading desks, and central banks
are among those already leveraging web information
in different ways. Firms such as Bridgewater, Artemis
and Mediolanum Asset Management have publicly
disclosed that they incorporate online information
into their investment strategy. These firms are blazing
the trail but it is only a matter of time before the rest of
the buyside are faced with a decision: either develop a
strategy that incorporates web information or get left
behind.
This paper discusses how web information is being

leveraged by the buyside today, and how information
will be leveraged by innovators in the future.

The Web Events That Have Grabbed Wall Street’s Attention
Some industries have embraced the web’s transformative potential faster than others, with the financial services industry
lagging significantly behind. Gnip, a subsidiary of Twitter, estimated that when it comes to adopting social data analytics
there is a three year lag between the finance sector and the brand/marketing sector2.
That said, notable events and information released on the web have grabbed Wall Street’s attention over the last two years.
These events have served as a wakeup call for Wall Street; the web is an important source of information and certain
buyside firms are already harnessing its potential.
Netflix’s CEO discloses viewing numbers on personal

Facebook account (July 2012)
Netflix CEO, Reed Hastings, attracted attention in July of 2012 when he disclosed Netflix viewing numbers on his
personal Facebook page.
His actions highlighted the uncertainty surrounding the application of Regulation of Fair Disclosure to social media.
The Regulation stated that information must be published in a manner “reasonably designed to provide broad, non-
exclusionary distribution of the information to the public”. Hastings deemed that the 245,386 subscribers to his Facebook
page was sufficiently broad.
Source: Facebook

SEC gives OK to social media (April 2013)

The Reed Hasting’s post prompted an inquiry by the SEC. On 2nd April 2013,
the SEC issued guidance stating that companies can use social media outlets to
announce material non-public information if the company has taken steps to alert
the market that it intends to disclose information through these channels3.
George Canellos, the Acting Director of the SEC’s Division of Enforcement noted
that; “Most social media are perfectly suitable methods for communicating with
investors, but not if the access is restricted or if investors don’t know that’s where
they need to turn to get the latest news.”
This decision both recognized and reinforced social media as a growing and
increasingly important information resource on Wall Street. Source: SEC
Bloomberg launches Twitter offering (April 2013)
The same week as the SEC issued its guidelines, Bloomberg announced that Twitter would be available on its terminals.
This marked a major development as effectively anyone with a Bloomberg terminal was now able to view tweets in a read-
only and compliant-friendly format.
Tweets published on the Bloomberg terminal are published on an uncurated basis. For example, the image shows that
the “expected flow” of tweets is “47.9 tweets/min”. Eagle Alpha offers Twitter feeds that are highly curated using both
technology and research analysts.
Source: Bloomberg

Cyprus bailout (March 2013)
The euro zone’s bail-out of Cyprus in the early hours of Saturday morning on 16th March 2013 came as a big surprise,
but is remembered today for how it highlighted the importance of Twitter and blogs as a source of information for Wall
Street.
Investment banks did not issue research until the Monday morning, so Wall Street, in need of real-time information and
analysis, turned its attention to social media. Those looking for local knowledge followed bloggers like Yiannis Mouzakis,
an “emergency specialist blogger”, and for analysis Pawel Morski, a “fund management veteran’”, was reported to have
provided the best insights according to Business Insider4.
A Société Générale currency analyst, Kit Juckes, commented on the weekend’s event and its significance for Wall Street
research on his blog; “Whether you are a trader, a salesperson, a fund manager, a Master of the Universe or indeed an
interested by-stander, what you want is information, opinion and debate and Twitter gives it to you5”.
Source: Twitter
Hacking of the Associated Press Twitter account by

the Syrian Electronic Army (April 2013)
The hoax tweet, that reported an explosion at the White House in April 2013, received a huge
amount of media attention as it triggered a 0.9% decline in the S&P 500 in two minutes, wiping
off more than $130bn in value.
This incident underlined Twitter’s growing influence and demonstrated its potential to move
markets given the growth of high frequency traders using technology to monitor Twitter activity.
Eagle Alpha’s research analysts detected the hoax by analyzing the content of the tweet which
algorithms could not do. Two of the tweets below are legitimate: which ones and why?

Source: Twitter
The first tweet is fake for the following reasons:

• The word “Breaking” should have been “BREAKING” as AP only uses capital letters at the start of each sentence.
• The fake tweet had a capital letter for “Explosions”, but it should have been lower case.
• AP does not tend to use words like ‘and’ when reporting breaking stories, instead preferring the use of a comma.
• AP calls the president “President Obama” not “Barack Obama”.
Furthermore, there were no other tweets in the Washington area reporting the explosion at that time.
Carl Icahn’s tweet disclosing his stake

in Apple (August 2013)
The activist stockholder’s infamous tweet about his stake in Apple caused the stock price
to jump instantaneously, adding US$12.5 billion to the market value of Apple.
Icahn’s tweets are watched closely by Wall Street. This was the first of many “market-
moving” tweets by Icahn. Other companies he has disclosed his position and strategy for
are eBay and Netflix.
Source: Yahoo Finance Source: Yahoo Finance

Blinkx stock hit by blog post of Harvard professor (January 2014)
Ben Edelman, an associate professor of Harvard Business School in the Negotiation, Organizations and Markets unit,
blogged about the video and advertising company Blinkx at the end of January 2014. In his post, “The Darker Side of
Blinkx6 ”, he raised serious questions about the company’s revenue reporting and business model, concluding: “If I traded
in the companies I write about (I don’t!), I’d short Blinkx”.
The post triggered a 40% slide in Blinkx’s share price in the month of February.
Source: LinkedIn Source: Yahoo Finance
A post by Search Engine Land showed that Expedia lost 25% of its Google
search visibility (January 2014)
The post by Search Engine Land, a site dedicated to

reporting news and information on search engine
marketing, revealed that the travel-booking website lost
25% of its search visibility on Google after being penalized
for buying links that helped improve search rankings7.
Expedia’s stock dropped more than 4% in early trading the
next day.
Source: Search Engine Land
While Wall Street has been late to harness the full potential of the web, these examples demonstrate the growing importance
of online sources of information for the buyside. The above examples highlight the market-moving potential of certain
information, as well as the opportunities for sourcing insightful content and analysis. Whilst these examples are short-
term in nature, the web also provides opportunities for longer-term investors, as demonstrated in the following sections.

Examples of Buy Side Investors Already Unlocking Value of the Web
While Wall Street may be lagging behind other

industries in making the most of online information,
research by Gnip (a Twitter subsidiary) suggests that
the adoption of social data analysis in the financial
industry is at the beginning of an inflection point and is
set to accelerate rapidly in the near future: “In the past
12 months, we’ve seen both an escalation in the number
of new firms embracing and innovating, as well as early
adoption by some of the larger somewhat risk-averse
players in the industry”.
Seth Mc Guire, director of business development at Gnip

said that they provide “over a dozen” large quantitative
hedge funds (with minimum $1bn AUM each) with the
entire Twitter firehose. Rob Bailey, CEO of Datasift (the
only other authorized reseller of all of Twitter’s data),
said that even before launching in 2011 they received
a number of calls from hedge funds and investment
banks who wanted access to social media feeds8.
Brunswick, the financial communications firm,

conducted a 2014 survey; “Investor use of Digital and
Social Media”. From a sample of 472 buy-side investors
and sell-side analysts across the US, Europe and Asia Source: Brunswick
they found that 70% of investors believe that digital media will play an increasing role in future investment strategy. Just
over a quarter of respondents had based an investment decision on information sourced from a blog, and about 15% from
micro-blogging sites like Twitter or its Asian equivalent, Sina Weibo9.
Clearly certain buyside firms are already making use of online sources of information to create competitive advantage but
who are they and how are they doing so?
Only a few notable exceptions have broadcasted publicly how they have incorporated social media analytics or curated web
content into their investment process, including Bridgewater Associates, Artemis and Mediolanum Asset Management.

Bridgewater have publicly disclosed that they leverage web information for real-time
economic modelling. This macro hedge fund uses all tools at their disposal to “track the
economy on a day-to-day basis” and “to be really on the pulse of what’s going on”. This
includes social media data, real-time internet price data and search engine data.
Analyzing web data they search for equivalents of traditional macro indicators. Greg
Jensen, Bridgewater’s co-chief executive and co-chief investment officer has said that they
use sites like Amazon India to track inflation “during a balance of payment crisis on a
moment-to-moment basis” and thus can tell if any sharp currency moves have filtered
down to end prices. Another application mentioned by Jensen is monitoring auto sales by
listening for every time someone says that they buy a new car on Facebook or Twitter and
comparing this to official statistics released periodically10.
Hedge funds are not the only economic agents using online data to gain a relevant and
Ray Dalio, founder timely understanding of economies. Central banks are using Google search data in a
of Bridgewater similar way. A study published in 2009 by two MIT professors, Erik Brynjolfsson and
Associates Lynn Wu, found that it is possible to predict US house prices and sales with search volume
data11. Brynjolfsson recognized the significance of this for policy makers: “When central
bankers were looking at traditional data, they were essentially looking out the rear-view
mirror.” Since their study, many central banks around the world have done their own
studies and used web data to assess their national economies 12.
The Bank of England monitors online search data as part of the range of different indicators
it considers in forming its view about the outlook for the economy of the United Kingdom,
in particular for the housing and labour markets. They find that searches for “job seekers
allowance” can help predict unemployment data.
The Bank of Israel was one of the first central banks to use search data for policy making. It
analyses keyword counts to gauge consumer demand before official statistics are released.
The bank computes a monthly index that reflects the health of the economy which is
considered before setting Israel’s benchmark interest rate.
The Federal Reserve have researched how internet search data can forecast financial market
data, finding it useful to “now-cast”, or forecast the trajectory of refinancing applications
filed by homeowners through searches for “mortgage refinance”.
The Bank of Japan investigated using search data and point-of-sale records to create a new
index of economic indicators that would be updated daily or weekly, instead of monthly.

The Banca d’Italia’s working paper deals with the predictive power of Google searches in
forecasting unemployment.
The Banco de Espana used search data from the UK to predict tourism towards Spain by
analysing travel-related queries.
Economists from the Central Bank of Chile found that an increase in people browsing for
cars predicted an increase in auto-sales.
The applications of web data and information are in the early stages of discovery, but are
set to be crucial to real-time understanding of economies.
Other hedge funds and asset managers are sourcing information from the web to gain a competitive advantage. Artemis,
a UK-based fund manager with £18.6 billion in AUM, differentiates itself by its use of social media data when raising
assets under management for the Artemis UK Growth Fund and the Pan Euro Hedge Fund. As we see in the slide
below, to their traditional four pillars of portfolio and security selection they have added social media. They seek specific
company colour insights from the web.
Tim Steer, Equity Fund

manager at Artemis,
remarked:
“Social media is an
increasingly important part
of understanding companies,
particularly as traditional
sources of information on
companies have become
quieter: Closer regulatory
scrutiny means that
companies are more cautious
with information disclosure,
Source: Artemis
and investment analysts are
providing ever less insight.
Adding this new element to
my investment process has
helped raise AUM”.

=Mediolanum Asset Management have similarly integrated social media into the investment process. This graphic
shows how they leverage information from Google Trends, Twitter and investment blogs as an important step in the
process of identifying opportunities.
A Senior Portfolio Manager of Mediolanum Asset Management explained further:

“Med3® utilizes a combination of fundamental and technical analysis combined with an appreciation of investor
sentiment and positioning to determine where an asset is in its investment cycle. For the latter we invest with the
momentum until the sentiment becomes extreme and this is where we take a contrarian position. We have a number
of sources for determining investor positioning and sentiment including fund flows, institutional and retail surveys.
Source: Mediolanum
We also leverage the web to determine sentiment in the markets

through Twitter. We also utilize Google trends to analyses whether
the frequency of news stories on a topic has become so extreme as
to indicate a potential inflection point”.
High frequency traders leverage information from the web. As
Source: Twitter

mentioned previously, the Associated Press “hash crash” revealed that, as well as scanning news sources, HFTs are
scanning social media, like Twitter. In just two minutes the tweet drove 140 points off the Dow Jones Industrial
Average.
How the Buyside are Leveraging the Web Today
The internet can meet the varied needs of different types of buyside investors, as well as leading to timelier and more
Alpha Generation (Pg.13)

Traders Risk Mitigation (Pg. 15)
Real-time Insight( Pg.15)
CEO Commentary (Pg.15)

Stocks Portfolio Managers Employee Views (Pg. 16)
Due Dilligence (Pg. 17)
Crowd based forecasts (Pg.18)

Research Analysts Unique Colour not on RNS (Pg.18)
Data-driven Signals&Insights (Pg.19)
Buyside
Actionable Insights (Pg.19)
Traders Risk Mitigation (Pg.20)
Real-time Insights (Pg.21)
Sina Weibo Inights (Pg.21)

Macro Portfolio Managers Predictive Modelling (Pg.22)
Views of Expert Bloggers (Pg.22)
US Inflation Insights (Pg.23)

Research Analysts UK Housing Insights (Pg.23)
Baidu Index (Pg.24)
astute applications of economic policies. In the following section we reveal examples of how the buyside are currently
leveraging the web today, including several use cases of Eagle Alpha.
Stocks – Traders
Alpha Generation
Traders can gain a decisive advantage over their rivals by trading based on information sourced online. Everyday
information that causes stocks to rise (or fall) breaks on social media before a traditional newswire picks it up and reports
it to the market.
For example, on 11th April 2014 Charles Gasparino of Fox News tweeted that Herbalife was bracing itself for an expose
on the company’s business practices. The stock fell 5.5%. Subsequently the FT tweeted a more serious story that the FBI
and DOJ are undergoing a criminal probe of its practices. The two tweets beat traditional wires and altogether the stock
fell over 15%.
Trading a few minutes ahead of the market can generate alpha. Freelance journalists or people close to the source of deals
often break news first. For example, a freelance business reporter tweeted that KKR was secretly building a stake of almost
5% in US-listed Marvell Technology, a semiconductor business, in November 2013. The stock was up 10% on the tweet
and there was a seven minute lag before it appeared on traditional wires.
Paying attention to unconfirmed news from reliable sources can be an important source of alpha too. In January 2014

Source: Eagle Alpha and Bloomberg

FT Alphaville stated that there was a rumour that there was interest from
an unnamed Canadian bank in F&C Management. F&C subsequently
released a statement, 34 minutes later, confirming that they received a
firm offer of 120p per share. The stock increased 21% on the headlines.
Risk Mitigation
Unexpected news can have a major impact on asset prices. Risk can be
mitigated by paying attention to the web. In January 2012, the Carnival
cruise ship, Costa Concordia, hit the rocks off the coast of Italy. A travel
writer on board started tweeting about the disaster. Carnival shares were
trading at more than $34 in New York, leaving a 25 minute window to
react before the markets closed for the weekend. The shares opened the
following week at $2913.
All types of information on the web can cause stock prices fall. As already Source: Twitter
discussed, expert commentary contained in the blog posts about Blinkx
and Expedia hit these companies’ stocks, causing a gradual 40% decline
in Blinkx’s share price over the course of the subsequent month, and an
almost immediate drop in Expedia’s by 4%.
Real-time Insight
Access (via Eagle Alpha) to the Twitter firehose of 15 billion tweets per
Source: Eagle Alpha
month gives traders real time insight as they can monitor Twitter for information that may not appear on traditional
sources immediately. We see below that when a Google employee announced the launch of their Panda update there was
a peak in tweet volume containing ‘$ebay’ as eBay’s organic search ranking took a huge hit and traders turned to Twitter
to share insights.
Stocks - Portfolio Managers
CEO commentary
Portfolio managers monitor companies that they hold a stake in, or are considering investing in. Listening to what the
CEO is saying, on his/her blog or Twitter account, is a great source of information, particularly for industry commentary,

Source: Twitter Source: LinkedIn
company announcements and results updates. Certain CEOs have embraced digital communication more than others.
Examples of CEOs who have particularly engaged with the medium to provide insightful commentary on company
direction and performance updates are Jeff Immelt (General Electric), Jeff Weiner (LinkedIn) and John Donahoe (eBay).
Employee views
Analysis of commentary provided by current and former employees can reveal sentiment towards management, work
Source: Glassdoor

Source: Fenzhi
culture, salaries and benefits, and quality of employees. Glassdoor.com

is one of the most popular employment sites worldwide, operating in
190 countries. Fenzhi.com is one of China’s most popular employer
review websites. Below are a selection of opinions expressed from
employees of Salesforce.com, which is often commended for being
one of the best companies to work for, and employees of Alibaba
Group’s subsidiary Taobao.
Due diligence
Using information from the web can help portfolio managers in the
research and due diligence process. There are numerous sources
of information that can be used, but an interesting one, which
portfolio managers do not often take advantage of, is videos. Tesla
are particularly good at giving “behind-the-scenes” tours of their
production lines and product demos. Senior test engineers discuss
details of materials and production line processes. Click here for a
Source: YouTube

peek inside Tesla’s Robotic factory.

Consumer or expert product demo videos are valuable as they can
offer unbiased opinions. For example, there have been numerous
product demos for Google glasses, showing the new technology
in action, and discussing certain drawbacks. Click here to share
the experience of a day wearing Google glasses
Stocks - Research Analysts

Crowd based forecasts
Increasingly the internet is being used as a way of leveraging the
power of the crowd, with crowd sourcing and crowd funding
becoming more and more popular. Estimize.com, an open
platform for sharing earnings estimates, taps into the power of the
crowd. This site aims to create a more accurate and representative
consensus expectation by crowdsourcing earnings estimates. Source: Estimize
Estimize aggregate the predictions and posts of contributing
analysts and post them next to the Wall Street consensus forecast.
Hedge fund investors, independent analysts, independent traders and investors and corporate finance professionals
who have interesting viewpoints all contribute to the dataset, making the figures very powerful. Estimize states that
its consensus is more accurate than Wall Street 69.5% of the time. Contact us if you would like an introdroduction to
Estimize.
Unique colour not on RNS
The Internet is a great source of unique color on stocks and companies. Research analysts who are not allowed access
Twitter on their work devices can miss out on important information on social media, particularly from the likes of
Source: Twitter
CEOs, analysts and experts.

Commentary from executives when they are speaking at conferences can be particularly insightful. Below are three
Source: Twitter

tweets by Eric Savitz, a specialist in corporate and media strategy with Brunswick. He is citing the Netflix CEO at the
Codecon conference in May 2014.
Commentary on social media around product launches also provide great colour for analysts. The following are examples
of views post the Amazon Smartphone launch:
Data-driven Signals and Insights
Analysis of Twitter and Google for specific companies can reveal interesting insights on how products and services are
being perceived. All of Twitter’s firehose can be processed to analyze sentiment towards a company over a period of time.
All tweets containing the company’s name are identified as either positive or negative.
Eagle Alpha analyzed over 10,000 tweets since January 2014 that refer to Ryanair (when they launched new initiatives to
improve customer service, reduce charges and allow a second piece of carry-on luggage). Results indicated that sentiment
Source: Eagle Alpha
towards Ryanair had improved.

Other tools can be used to analyze search engine visibility. This graph shows how Ryanair has lost 25% of its Google
visibility since the start of the year. This is caused by their failure to migrate pages from their old website when they
created their new one. Data from Hitwise suggest that Ryanair receives 20% of its internet traffic from search engines.
Macro- Traders
Actionable Insights
A survey by OneMarketData showed that the consensus among investors currently is that the greatest benefits of social
media content are felt mostly in the fast moving equities and derivatives markets14. The web is not only useful for equity
investors however- it can also be leveraged in global macro trading and investing strategies.
News events breaking on the likes of Twitter have a similar value for macro traders as traders focused on equity markets.
In October 2013 news broke on Twitter that John Boehner had agreed to allow the Senate proposal on the debt ceiling to
pass. The market reaction to the tweet was a 0.7% jump in the value of the Dow, equivalent to $30 billion in market value.

Source: Twitter
Sourcing breaking news close to the source is also important, particularly during geopolitical conflicts. Tweets from
“Ukraine Reporter” in June 2014 about sightings of Russian tanks entering Ukraine and chatter about a full scale invasion
on Ukraine by the Russians were followed by a 50bps jump in crude oil.
Risk mitigation
The internet can also be leveraged as a risk mitigating tool by listening for news that might sway the global currency or
bond markets. In July 2013 it was rumoured that the Portuguese Finance Minister wanted to resign from his post, via
Twitter. It took traditional wires 10 minutes to pick up on this news which caused a subsequent spike in Portuguese 10-

Year yields.
When four Egyptian Cabinet Ministers resigned in July 2013 the French Press Agency (AFP) broke the news first on
Twitter and again traditional wires were delayed picking up on it. The tweet was the start of the troubles in Egypt during
July 2013.
Real-time Insights
With access to the entire Twitter firehose (via Eagle Alpha) it is possible to monitor trends or events of interest. These
searches provide real-time actionable intelligence. We see from this diagram the volume of tweets containing the words
“Ukraine” and “Russia” together over the course of a week, from 15th June to 21st June 2014. The peak of tweet activity
occurred around midday on June 16th as the world became aware that Russia had cut off oil supplies to Ukraine. In the
early hours of the morning “Ukraine Reporter” had announced the news.
Macro- Portfolio Managers
Sina Weibo Insights
Sina Weibo, the most popular social media website in China, is used by experts and economists to post insightful
commentary. Messages on this micro-blogging website are significantly longer than tweets so the content has the potential
to provide context as well as updates

The first example below shows Chinese economist, Ma Guangyuan, commenting on the Chinese housing market on Sina
Source: Eagle Alpha / Sina Weibo
Weibo. He believes that the market is showing signs of decline, and that preventing the housing market from collapsing
should now become policymakers’ priority.
Liang Rui’an, hedge fund manager at PinPoint Fund, shares important insights relating to Iron ore. The Data shows that
the Chinese commodity is oversupplied and suggests a growing downward pressure on the iron ore price.
Predictive Modelling
Recorded Future is a company that is scanning the Internet

for predictive signals to spot events and trends early. Their
predictive models can help anticipate risks so that investors
can capitalise on opportunities. For example, Recorded
Future analyse public web data and monitor tweets to predict
geopolitical disturbances. In May 2014 they blogged about
the likelihood of civil unrest following Egypt’s Presidential
election. They have also suggested that analysis of open source
information indicates that social unrest will spread into the
western region of Ukraine as Russia will seek to exert pressure
here to solidify gains 15. Contact us if you would like an
introduction to Recorded Future.
Views of Expert Bloggers

Some of the most interesting macro insights online are
contained in blogs. Experts commenting on political events, Source: Money Matters blog
government policies and economic developments will often
do so in blog posts. There are hundreds of interesting people
providing insightful blog content.

Source: Twitter
Francesco Papadia, the ex-Director for Market Operations at the European Central Bank, draws on his 40 years’ experience
to provide monetary policy development insights. He predicted very accurately the details of Mario Draghi’s TLTRO
on Thursday 5 June 2014 three days in advance of the meeting16.announcements at the ECB Governing Council meeting
Influential fund managers, like Dan Alpert of Westwood Capital
and Shane Oliver of AMP Capital, blog and tweet regularly to
discuss macro developments, investment and risk in advanced
and emerging economies.
Macro- Research Analysts
US inflation Insights
Research analysts can leverage Google search data in a similar
way that central banks worldwide are doing, to complement
macro indicators. As consumer habits have developed and
turned more towards the internet, search data has become a
rich data source that can make economic models more accurate.
To gauge trends the popularity of certain terms are analyzed
over a number of years. For example, analysis of Google search
data since 2004 shows a significant correlation between the
search terms ‘more expensive’ (0.96), ‘what is the cost’ (0.94),
and U.S. CPI data. This data can therefore be monitored in real
time to track inflation.
US housing Insights
As well as providing inflationary insights, this unique data can
be used to infer future purchasing decisions. When people are
looking to buy a car or a house, the web is now their first port Source: Eagle Alpha
of call rather than dealerships or estate agents like it was in the

past.
Analysis of Google search data since 2004 shows a significant correlation between the search terms ‘American mortgage
network’ (0.97), ‘mortgage leads’ (0.97) and new home sales data in the US. Macro analysts interested in understanding
big picture influences in the marketplace would find leveraging this data very useful.
Source: Baidu Index
Baidu Index
Baidu, the most popular search engine in China, has a feature similar to Google Trends called Baidu Index. It can be used
for monitoring search trends in China. Research analysts can leverage this data for China specific insights.
Below is a time series from Baidu Index for “Estate Agent” (地产代理), which could
be used to calculate future purchasing expectations for houses.
10 Examples of How the Buyside Will Leverage the Web
This is only the beginning for Wall Street leveraging the web. The best advances are yet
to come and it will be innovative buyside firms who will be leveraging the web in the
most interesting ways. Some use cases:
1. Analysis of Foursquare Data to Predict Sales
Analyzing data from location-based social networks, like Foursquare and their newly
launched Swarm app, which allow users to “check-in” at venues could provide very

valuable insights.
By building geo-fences around the stores it would be
possible to chart trends regarding the number of people
walking into every Starbucks or Pret-a-Manger in
Manhattan. Various metrics could be measured over time;
check-ins recorded each day, the most frequent visitors,
and even gender break downs. Check-in data related to a
company’s stores as well as their competitors would offer
unique insights and opportunities to forecast sales and
performance.
What is even more exciting is that Foursquare have plans

to make this data even richer- with newly launched Swarm
app their goal is to introduce automatic check-ins. If
checking-in is made passive this will even further increase
the value of this data.
Source: www.fastcolabs.com
2. Create quantitative strategies based on the

top influencers on Twitter
Information is the lifeblood of high-frequency algorithmic
trading and quantitative strategies. Rather than plugging
the entire Twitter firehose into their systems, analysing
the top influencers on Twitter would yield better results.
Instead of analysing content from the 974,000,000
twitter accounts, funds could focus on the top 10,000
identified influencers. Since November 2012 Eagle Alpha
has leveraged algorithms and research analysts to identify
the top 10,000 stock market influencers on Twitter. From
July 2014 this information set is being made available to
quant funds.
3. Monitoring geo-tagged tweets

Roughly 20 percent of tweets show users location, either
directly embedded in a geo-tagged tweet or from users
inadvertently revealing their location. In theory therefore it
is possible to monitor information coming from a specific
location to search for crucial insights directly at source.
Possible applications of this would be to listen to what is
being said at a specific Exxon or BP oil rig or Facebook
HQ. These applications would provide great insight into
what employees are saying.
4. Analysis of Sina Weibo firehose data

Analysing data from Sina Weibo, the dominant Chinese

social media channel with 500 million registered
users and 100m messages posted daily, could offer a
unique opportunity for the buyside to understand the
demographics and interests of the world’s second biggest
consumer market. Gnip noted that “the social data available
on Chinese platforms is a lot richer. You can get gender,
location, and users are willing to share that information.
Weibo is even able to provide education level”. Access to
Sina Weibo data and firehose search will provide investors
with invaluable insights of a market with more than 1.6
billion consumers.
5. Leveraging blog content Source: houseofdebt.org
Leveraging blog content is more difficult than information

from other social media feeds given how dispersed blogs are
online. There are hundreds of quality bloggers worldwide
sharing their expertise and providing great insights on
macro topics but it is difficult to find and monitor the most
important sources.
In July 2012 Eagle Alpha will launch a new feature that will
leverage our technologies and research analysts to identify
the best blog content across the entire web, organise it into
them or regions and rate it. Contact us if you would like a
free trial.
6. Image analytics
Text is not the only interesting content on the web to be
analysed. Images provide a rich and valuable source of
information. Millions of images can be processed and
analysed for information of interest.
It is feasible that using a combination of technologies; such
as facial recognition software and geo-location data, that
CEOs movements could be tracked through photos posted
of them through social media channels.
7. Pharmaceutical industry insights

There is vast amounts of information available online
Source: Practice Fusion

relating to pharmaceuticals which could be leveraged for investment

decisions. One website in particular aggregates data from US GP
prescriptions for all drugs. From the data it generates real-time market
shares for all drugs across the US and tracks how market shares have
evolved over time.
In the treatment of type 2 diabetes we see that Januvia is the most
common drug prescribed, but we see highlighted the rapid penetration
of Invokana since its launch. This information is particularly interesting
therefore for analysts monitoring drug trials or patent expirations.
Another website scrapes patients’ forms for drugs. Drugs used for
the same purpose are rated based on the data and information on the
Source: Eagle Alpha
patients’ top concerns is given.
8. Pre-IPO report
Given that the web provides unique insights on companies, analyzing this information in the lead-up period to an
IPO can reveal interesting information, particularly given the lack of information available on companies pre-IPO. For
example, investors are be interested in reports that leverages online information ahead of the highly anticipated Alibaba
Group IPO. In early July Eagle Alpha will publish a 50 page pre-IPO report on Alibaba Group. Contact us if you would
like a copy.
Smoother information flow from online

information reduces market volatility
9. Custom Research
A new company that is about to launch will specialize in custom
web research. Using a wide range of licensed tools and software the
web can be leveraged to find insightful information and analysis.
Research can be conducted on any topic; from translation of the best
commentary on Sino Weibo in H1 2014 regarding commodities, to
analysis of all employee commentary in H1 2014 regarding Netflix,
or even female sentiment in Manhattan during the two weeks
following the launch of the next iPhone. Contact our CEO if you
would like an introduction to the company that will do custom
research. His email is emmett.kilduff@eaglealpha.com.
Source: BNY Mellon
The range and scope of information that can be leveraged for investment purposes is wider than most of Wall Street
realize. What ideas do you have? Eagle Alpha are launching a competition to find the best ideas regarding how Wall Street
can leverage the web. The best idea submitted to Eagle Alpha before July 31st 2014 will win a case of wine worth $1,000.
Send submissions to: emmett.kilduff@eaglealpha.com

10. Generate more precise real-time measures of macroeconomics and industry

As discussed, key economic announcements like housing and car sales can already be reasonably anticipated from Google
search analysis. By choosing other appropriate economic drivers to analyse, greater economic, regional, national, and
industry segmentations should be possible. This information could be used to generate more precise real-time measures
of macroeconomics (growth, inflation, trade) and industry, or even to develop aggregate international economic and
financial statistics.
This could have a huge impact on global capital markets, risk and volatility. Bond markets may be less affected by
infrequent information releases such as quarterly economic reports with a steady stream of higher quality inputs from
data. Economic releases such as GDP, inflation and industrial production may become more accurate and less surprising
thanks to advance signals from data methods 17.
The Eagle Alpha Solution

Eagle Alpha curates the entire web for actionable intelligence to give to Wall Street.
The company was founded in 2012 by a former Morgan Stanley investment banker, Emmett Kilduff. To view a short
introduction on CNBC, click here. Since 2012 we have built a world-class team of employees, investors and advisory
panel members that brings together experience from companies including Barclays, Cairn Capital, Cantor, CQS, Credit
Suisse, HSBC Asset Management, Jefferies, JP Morgan, Knight Capital, Macquarie, Markit, MergerMarket, Morgan
Stanley, Oaktree and Schroders.
A key differentiator of Eagle Alpha is that we curate the entire web. While Twitter provides breaking news and insights
from analysis of the 15 billion tweets each month, there are also great opportunities to find actionable insights elsewhere
on the web. For example, we source intelligence from hundreds of forums, thousands of blogs, millions of websites,
LinkedIn, Facebook, Sina Weibo and Tencent Weibo.
The buyside’s major challenge with web data remains identifying the signals from the noise. Eagle Alpha’s two-step process
overcomes this:
1. Eagle Alpha use a wide range of sophisticated technologies to filter and distribute the most relevant data for
clients’ specific needs. We leverage more than 25 technologies, between online tools, licensed software and
proprietary technology developed in house (like our algorithm that identifies the top influencers to follow on
Twitter for any stock or topic).
2. Technology only eliminates some of the noise however. In order to fully eliminate noise we believe that human
judgment is required. Eagle Alpha currently employs 11 research analysts and all our senior analysts have buyside
and/or sellside experience.
Our research analysts publish three types of actionable information:

1. Market-moving information sourced predominately from tweets and blogs.
2 Unique color like CEO, senior management, analyst and expert commentary from the web that is
not found on traditional sources or RNS.
3. Data-driven analytics insights on longer-term trends and themes. (e.g. analysis of 15 billion
tweets each month for insights on the US consumer).
All information is provided to clients in a compliant-friendly manner as the information is read-only and is stored for
5+ years.
Our vision is to be the number one provider of actionable information from the web to Wall Street. We completed an
angel round (click here for New York Times article) in February 2014 and in September 2014 we will begin a large Series

References
1
IDC Digital University study 10
Zero Hedge, “World’s Largest Hedge Fund Uses Twitter For Real-
Time Economic Modeling”
http://www.emc.com/collateral/analyst-reports/idc-extracting-value-
from-chaos-ar.pdf http://www.zerohedge.com/news/2013-12-12/worlds-largest-hedge-
fund-uses-twitter-real-time
2
Gnip White Paper: “Social Media in Financial markets: The Coming
of Age” Brynjolfsson, Eric and Wu, Lynn, “The Future of Prediction: How
11
Google Searches Foreshadow Housing Prices and Quantities”

http://gnip.com/docs/social-media-and-markets-the-coming-of-age.
pdf http://aisel.aisnet.org/icis2009/147/
3
SEC Says Social Media OK for Company Announcements if Investors 12
Bloomberg, “Your 119 Billion Google Searches Now a Central Bank
are alerted. Tool”
http://www.sec.gov/News/PressRelease/Detail/ http://www.bloomberg.com/news/2012-08-02/your-119-billion-
PressRelease/1365171513574#.U6hAfPRDscQ google-searches-now-a-central-bank-tool.html
4
Business Insider: “Twitter Just Crushed Wall Street after the Cyprus The Telegraph, “Investment analysts are stuck in a rut, Twitter can
13
Bailout” pull us out”

http://www.businessinsider.com.au/twitter-beats-the-sell-side-after- http://www.telegraph.co.uk/finance/comment/9217851/Investment-
cyprus-bailout-2013-3 analysts-are-stuck-in-a-rut-Twitter-can-pull-us-out.html
5
Kit Juckes personal blog; “brevity is the soul of wit – how Twitter OneMarketData Survey: “Understanding the Influence of Social
14
changes research” Media on Financial Markets”

http://mardlecapital.blogspot.ie/2013/03/brevity-is-soul-of-wit-how- http://www.onetick.com/web1/webinars/Social_Media_Survey.
twitter.html php?code=gEm50combS&id=a2d60ef2-53fd-91b4-e1e3-9d77fc01a159
6
Ben Edelman personal blog, “The Darker Side of Blinkx” 15
Recorded Future blog: “Updates: Putting Unrest in Ukraine’s West in
Perspective”
http://mardlecapital.blogspot.ie/2013/03/brevity-is-soul-of-wit-how-
twitter.html https://www.recordedfuture.com/ukraine-forecast/
7
Search Engine Land, “Expedia Lost 25% of their Search Visibility in 16
Francesco Papadia personal blog, Money Matters,
Google Possibly over Unnatural Links”
www.moneymatters-monetarypolicy.blogspot.com
http://searchengineland.com/expedia-loses-25-of-their-search-
visibility-in-google-possibly-over-unnatural-links-182113
17
BNY Mellon; “A First Perspective: The Transformational Influence of
“Big Data” on the 21st Century Global Financial System”
8
Bloomberg Businessweek, “How Many HFT Firms Actually Use
Twitter to Trade?” http://us.bnymellonam.com/core/library/documents/knowledge/
Viewpoints/sBig_Data.pdf
http://www.businessweek.com/articles/2013-04-24/how-many-hft-
firms-actually-use-twitter-to-trade
9
Brunswick Review, 2014 Brunswick Investor Use of Digital and Social
Media Survey,
http://www.brunswickgroup.com/publications/surveys/2014-
brunswick-investor-use-of-digital-and-social-media-survey/

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Discovering The Web’s

Examples of buyside investors already unlocking value of the web p.9

How the buyside are leveraging the web today p.13

10 Examples of how the buyside will leverage the web p.24

The Eagle Alpha solution p.28

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 2

Wall Street has been hesitant to adopt the web as a

Massive amounts of data are being generated every

In addition to this, the majority of Wall Street firms

That said, the web is fast becoming an essential

This paper discusses how web information is being

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 3

The Web Events That Have Grabbed Wall Street’s Attention

Netflix’s CEO discloses viewing numbers on personal

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 4

SEC gives OK to social media (April 2013)

Bloomberg launches Twitter offering (April 2013)

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 5

Cyprus bailout (March 2013)

Hacking of the Associated Press Twitter account by

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 6

The first tweet is fake for the following reasons:

• AP calls the president “President Obama” not “Barack Obama”.

Carl Icahn’s tweet disclosing his stake

Source: Yahoo Finance Source: Yahoo Finance

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 7

Blinkx stock hit by blog post of Harvard professor (January 2014)

Source: LinkedIn Source: Yahoo Finance

The post by Search Engine Land, a site dedicated to

Source: Search Engine Land

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 8

Examples of Buy Side Investors Already Unlocking Value of the Web

While Wall Street may be lagging behind other

Seth Mc Guire, director of business development at Gnip

Brunswick, the financial communications firm,

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 9

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 10

Tim Steer, Equity Fund

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 11

A Senior Portfolio Manager of Mediolanum Asset Management explained further:

We also leverage the web to determine sentiment in the markets

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 12

Alpha Generation (Pg.13)

CEO Commentary (Pg.15)

Crowd based forecasts (Pg.18)

Sina Weibo Inights (Pg.21)

US Inflation Insights (Pg.23)

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 13

Source: Eagle Alpha and Bloomberg

Source: Eagle Alpha and Bloomberg

Source: Eagle Alpha and Bloomberg

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 14

Source: Eagle Alpha

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 15

Source: Twitter Source: LinkedIn

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 16

culture, salaries and benefits, and quality of employees. Glassdoor.com

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 17

peek inside Tesla’s Robotic factory.

Stocks - Research Analysts

CEOs, analysts and experts.

www.eaglealpha.com | enquiries@eaglealpha.com | @dollareagle 18

Data-driven Signals and Insights