From Fitbits To Rokus, Hedge Funds Mine Data For Consumer Habits

In an effort to gain an elusive trading edge, some of the world’s biggest hedge funds have been snapping up large swaths of alternative data from Fitbits, Rokus, Teslas and employment websites like Glassdoor. Bloomberg reports: Spotting trends and patterns in consumer habits is big business, part of a global market for big data, that a JPMorgan Chase report said could reach more than $200 billion by next year. Still, there’s no guarantee all that information will lead to riches. It needs to be scrubbed, organized and aggregated to be of any use. WiFi and Bluetooth connections have become so ubiquitous they’re often taken for granted. But hedge funds have become keenly interested in tracking devices that connect to the internet. Capturing signals they emit can show “when and where new things appear in the world,”; said Hugh O’Connor, director of data sourcing and partnerships at Eagle Alpha, which gathers alternative data for the finance industry. Firms can keep tabs on the number of Roku video-streaming devices or Fitbit fitness trackers being used, the length of time consumers spend on them and their approximate locations. Similarly, if you buy a Tesla Model 3 car and use its Bluetooth-enabled media, a data provider can capture when your new ride is hitting the road. There’s been “incredible demand” from some of the world’s largest asset managers for this type of information. Hedge funds are also pulling data from mobile phones as they can reveal, in real time, the number of people carrying devices at a particular location. “This can shed light on how many — or few — people are frequenting a retailer, supermarket or fast-food joint,” the report says. They’re also scraping the web to create bespoke collections of public data. “Some examples include pricing trends on airline flights or hotels, inventory figures for products offered on coupon website Groupon, or sales posted for merchandise on Amazon.com,” reports Bloomberg. Additionally, social media sites and credit card data help shed some light on what consumers are thinking. Employment data is also very insightful. “If a tech giant suddenly starts seeking talent from the health-care industry, for example, that could suggest it has a new product or service in the works,” reports Bloomberg. “A spike in the removal of job postings from a company’s website could signal corporate distress.”