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Alternative Market Briefing

Hedge funds leverage social media for trading decisions

Thursday, May 24, 2012

amb
Seth McGuire
Bailey McCann, Opalesque New York:

According to data from Twitter, when last year's Washington D.C. earthquake hit, users in New York read about it on Twitter 30 seconds before they felt under their feet. Ever since Twitter started breaking news through user networks, a variety of social media monitoring firms have been working to cash in on this edge by providing monitoring and analysis of social media services for busy company executives. Now, that trend is moving into hedge funds. US-based firm Gnip is providing hedge funds with a real time data feed that they are using to influence trading decisions.

Gnip was founded in 2008 when social media was making a splash in the consumer advertising space. Now, it is the largest provider of social data to the enterprise and delivers 90 billion public social data activities each month. In recent years other, less product focused industries have started to leverage social media monitoring to understand public moods and capture breaking news, avoiding the lag between when the news actually breaks and when it gets picked up by traditional media - if it gets picked up at all.

In essence, Gnip provides an aggregate data feed of public social media posts. So far, a dozen funds amounting to $30bn in assets under management are leveraging this data feed to impact their trading choices.

"Funds that choose us are typically $1bn to $5bn AuM, with a heavy quant slant," says Seth McGuire Director of Assets and Finan......................

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