The Power of AlphaSense for Alternative Data

In today’s digital era, data has become the lifeblood of business decision-making. Historically, financial analysts have relied heavily on traditional data sources like company earnings reports, filings, and economic indicators. However, with the rapid rise of technological advancements and the advent of big data, a new type of data has emerged: alternative data. 

AlphaSense, a leading market intelligence platform, offers superlative alternative data, or alt data, under the Expert Insights suite of primary research. AlphaSense Expert Insights is a powerful source of alternative data that helps researchers gather comprehensive information on key industries and detect market signals through its financial research, expert transcript library, and Expert Call Services.

Below, we explore what exactly alternative data is, how it has evolved over time, and why AlphaSense is an excellent resource of this non-traditional content set.

Understanding Alternative Data

Alternative data refers to any non-traditional data sets that can be utilized by investors to gain insights into business trends, consumer behavior, and market dynamics. Unlike traditional data sources, like financial reports and surveys, alternative data encompasses a wide array of information gathered from various sources. These alt data sources include expert transcript libraries, app usage, social media platforms, satellite imagery, web scraping, Internet of things (IoT) devices, and more.

Alternative data sets are information that is published externally of a company and is used by hedge fund managers, institutional investors, and corporations to access unique insights on the investment process. Its primary purpose is to complement traditional datasets and offer unique perspectives for better, more well-rounded decision-making.

Alternative data can be broadly classified into three main categories:

• Individual-generated data – Includes sources that are openly accessible, such as web-scraped data from websites, social media activity, and government databases. These provide valuable insights when repurposed for financial analysis.
• Exhaust data – Refers to information generated as a byproduct of digital activities, like credit card transactions, mobile location data, or app usage patterns. This type of data offers real-time insights into consumer behavior and trends.
• Sensor data – Sourced from physical devices like satellites or Internet of Things (IoT) sensors, which capture real-world information such as satellite imagery to monitor crop health or oil reserves, and data from smart devices used to track industrial or environmental conditions.

Individual-generated alt data is typically unstructured data sourced by social media, app usage, or web traffic but also includes more structured sources like expert transcript libraries or expert networks. Together, these three types of alternative data provide investors with a richer and more immediate understanding of economic activity and market trends, enabling more informed decision-making.

Soft Market Data

Another form of unconventional data is soft market data that is gathered through qualitative methods such as expert insights. Although quantifying soft market data is difficult, insights from experts can be structured and organized in innovative ways that make them more accessible to investment researchers.

While investment research is traditionally factual data-driven, the qualitative nature of expert insights can explain what those key metrics actually mean for any business, market, or trend to help investors validate theses and make well-informed investments.

Some examples of accessing expert insights are conversing with experts through calls, transcribing expert interviews into transcripts, conducting a customer survey panel, or establishing a vast network of experts.

Soft market data, characterized by its subjective or qualitative nature, is distinct from traditional hard data. It can include factors like:

• Market sentiment – The overall mood or attitude of market participants and consumers.   
• Investor confidence – The level of optimism or pessimism among investors.
• Economic indicators – Broader economic trends that may influence market behavior, such as GDP growth, inflation, or interest rates.   
• Industry-specific factors – News events, regulatory changes, or technological advancements that impact a particular industry.

While it may not be as quantifiable as hard data, soft market data can provide valuable insights into market dynamics and potential future trends. It can complement other data sources to make more informed investment decisions.

The Use Cases of Alternative Data

In the finance industry, alternative data has become increasingly valuable for hedge funds, asset managers, and investors looking for an edge in predicting market movements. Alternative data plays a crucial role in giving investors and financial institutions unique insights that aren’t available through traditional financial statements or market reports.

Alternative data can be used to conduct research for due diligence, portfolio management, consumer behavior, competitive landscaping, and private markets. Below are some of the key use cases of alternative data across different industries:

• Stock Price Predictions – Investors can use alternative data, such as credit card transactions, online reviews, or even social media sentiment, to forecast a company’s performance before earnings reports. For example, if credit card data shows increased spending at a retail chain, investors may predict strong earnings and buy the stock in advance.
• Macroeconomic Insights – Alternative data can provide real-time insights into economic trends. For instance, satellite data monitoring global shipping lanes or ports can indicate changes in global trade volumes. Similarly, traffic patterns or flight data can give insights into consumer and business activities, helping investors forecast economic growth or contractions.
• Risk Management – Hedge funds and institutional investors use alternative data to better assess risks. For example, if social media sentiment shifts negatively about a company or a specific industry, it could signal reputational risks.
• Consumer Behavior Monitoring – Investors analyze consumer behavior using mobile app usage data, website traffic, and social media trends to predict changes in demand for specific products or services in real time. This data provides early signals on which companies may experience growth or decline, allowing investors to make more informed decisions.
• Event-Driven Trading – Alternative data is also used for event-driven strategies, where traders react to unexpected events like natural disasters, geopolitical shifts, or corporate news. Satellite imagery can help traders assess the impact of a natural disaster on supply chains or infrastructure before the company reports any official impact, enabling quicker trading decisions.

You can dive even deeper into the use cases of alternative data here.

The Evolution of Alternative Data

The evolution of alternative data has been fueled by technological advancements and the exponential growth of digitization. In the early days, alternative data had limited industry applications and was primarily used by hedge funds and institutional investors seeking an edge in financial markets. They leveraged unconventional data sources, such as satellite imagery, to track retail parking lots or credit card transaction data to gauge consumer spending patterns for insights into market movements.

However, as computing power increased and data storage became more accessible, the applications of alt data expanded beyond finance. Companies across various industries realized that alternative data could provide valuable insights for marketing research, supply chain management, and even healthcare. Today, alt data has become an indispensable resource for decision-makers looking to stay ahead in an increasingly competitive landscape.

In the Signals podcast, host Nick Mazing, Director of Research for AlphaSense, discussed alternative data for corporations with Michael Maloof, Director of Marketing at Earnest Analytics. They suggested that while alt data has been utilized integrally by hedge funds, its use in the corporate world has more potential to come.

“So, companies and consultants, they’re really just beginning to turn to these newer alt data sets, like transaction data, like web pricing data, to fill in their data mosaic, gain a fuller understanding of their markets.”

– Michael Maloof, Director of Marketing, Earnest Analytics | Podcast

You can watch the entire episode here to learn more about alternative data emergence in the corporate world.

 

One expert from the AlphaSense expert transcript library, explains that one of the biggest challenges of data science is the access to large historical sets of data itself.

“I know you constantly hear that one of the biggest challenges with data science when you’re looking at large data sets over many years is just access to data, mapping data, being able to cleanly access data. You have alternative data that’s coming in that’s being able to displace.

Large budgets are going to alternative data now that weren’t happening before. It’s not in equity research anymore. They’re paying millions of dollars for credit card transaction data that a small start-up is cleaning and doing all the correlation analysis for them.”

– Former Group Head, Visible Alpha | Expert Transcript

And companies are definitely digging into this non-traditional data set to better their business decisions and operations. For example, the former Vice President of Opportun suggested that 95% of their marketing for clientele was sourced via alternative data.

“95% of the marketing done was done through direct mail, sending out opportunities to customers that were identified through alternate data sources. Customers typically didn’t have a credit score, using some alternate data sources that the company was utilizing, as well as follow-up loans to customers that previously had paid off loans and have lost performance to be able to give customers the ability to get larger-sized loans.”

– Former Vice President, Oportun | Expert Transcript

Furthermore, the former Executive Director of MSCI Inc. emphasized that startups are leveraging natural language processing (NLP) and artificial intelligence (AI) to parse through large content sets in the way AlphaSense does.

“I mention there’s also some startups that are trying to use that approach. For the alternative data sources, so one aspect is using natural language processing and AI to look at things like news articles, social media posts, and filings and the reports themselves. One, sometimes it can be used to generate a signal in and of itself.

Other times maybe it’s used to trigger an update. There’s generally an annual update cycle, but always we detected that there’s some significant change in this area for this company so we should do an update.”

– Former Executive Director, MSCI Inc. | Expert Transcript

The future will likely see even more sophisticated uses of alternative data as new technologies and data sources emerge through AI search technology and advanced NLP-based features that can save investors from the typical frictions that keep crucial insights at bay.

Leveraging AlphaSense to Parse Alternative Data

AlphaSense has revolutionized the power of alternative data in its market intelligence platform by innovating fast-tracked and streamlined access to large data sets with over 10+ years of investment in AI technology.

AlphaSense is set apart from traditional expert networks and other market intelligence platforms with its structured data sets, extensive expert transcript library, and industry leading AI technology. We explore the value of AlphaSense in leveraging alternative data greater detail below.

Wide Range of Data Sets

As of July 2024, AlphaSense and Tegus have joined forces, bringing unparalleled access to even more insights and covering more industries and companies than ever before. Both AlphaSense and Tegus platforms come with extensive libraries of high-quality research, as well as data and AI tools that allow users to extract the most value from the insights they find. This, combined with the other content sets within AlphaSense, provides you with the most robust and comprehensive research platform in the world.

The expert transcript library available in AlphaSense provides access to a vast data set of quality expert call transcripts with audio powered by AI. By leveraging our expert transcripts and AI power, you can quickly gain proprietary insights from industry experts with first-hand experience ranging from current and former executives, competitors, employees, and customers.

Additionally, Tegus has an extensive and fast-growing library of high-quality expert research, which includes coverage of 35,000+ public and private companies across TMT, consumer goods, energy, and life sciences sectors. 

Tegus’ financial data offering, which includes financials, KPIs, and fully drivable models on more than 4,000 public companies, as well as its BamSEC self-serve solution to search and access securities filings, adds new and unique offerings to AlphaSense’s extensive product suite and datasets.

Powerful AI Features

In addition to the aggregation of content into one platform, AlphaSense’s AI search technology allows researchers to eliminate manual research and quickly parse through documents to efficiently gather quality insights on any industry or topic. When combined with our award-winning AI, the expert transcript library and Expert Call Services are a vital resource for corporate start-ups, competitive intelligence, and institutional investors.

AlphaSense’s patented AI curates content relevant to you and allows you to easily uncover quality insights from expert interviews using Smart Summaries, Smart Synonyms™, and sentiment analysis. By leveraging purpose-built AI search technology, you can quickly surface relevant expert transcripts and find the perfect expert to engage with in a custom interview call within seconds.

Faster Time to Insight

Expert Insights brings you alternative data within seconds through its elevated user experience and at-a-glance insights that empower you to make sharper business decisions. You can get faster time to insight with AlphaSense by easily browsing transcript headlines and digestible 3-point summaries while using powerful AI features, search filters, and automated alerts.

AlphaSense’s user-friendly interface also allows you to jump straight to key topics with a hyperlinked table of contents and audio timestamps for easy navigation and access to voice inflections.

Industry-Leading Compliance

Compliance takes top priority at AlphaSense to deliver trustworthy alternative data for safety and peace of mind. Our dedicated compliance team carefully reviews each transcript to ensure it aligns with regulatory requirements, minimizing the risk of exposing primary research to material non-public information (MNPI). You’ll also gain access to our Compliance Portal for auditing all transcript activities and compliance questionnaires for complete transparency.

Learn more about our compliance guardrails for alternative data in our blog, Exploring the Compliance Process of Expert Insights.

Unlock the Power of Alternative Data with AlphaSense

As alternative data continues to redefine the way businesses operate, harnessing its power has become a necessity to staying competitive in fast-paced markets. AlphaSense serves as an excellent example of an alt data source that empowers organizations to extract meaningful insights, optimize decision-making processes, and uncover hidden opportunities.

Researchers can unlock a new dimension of success in today’s data-driven world by unleashing the power of structured alternative data through AlphaSense’s advanced tools.

Start your free trial to unlock the power of AlphaSense for alternative data today.