Using alt data at SMs
Do the fundamental, long-term SMs use alt data? Or is that more of a pod phenomenon? What's an example of an alt dataset that might be helpful to an SM?
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There are a few industry-specific alt data niches with LT applications. Helpful for market sizing / figuring out growth rates in my experience, which is a lot of what LT investing is about.
They do, they just don’t use it as much / to the extent that the pods do. And they don’t have the resources to fully monetize it to the extent that the pods do (team-specific data scientists, 8 figure data budget, analysts that have been using different data sets relevant to their sector for years)
helpful. do the scaled SMs (e.g. coatue) have the resources to monetize alt data?
Coatue yes, everyone else no. They all have data science teams, but I’ve just been really unimpressed with their data efforts
In some cases you’re right, in other cases they have the mandate flexibility to use different data in ways not available to MMs - for example, in names which don’t fit MM mandates, for directional niche subsector alpha or ideas with longer horizons or more up-front / expensive work that only makes sense to do where one can concentrate more or withstand more vol
Just like with qualitative data like expert calls - there are opportunities for creative and divergent approaches. I think people who say ‘alt data’ isn’t useful or requires substantial institutional resources to utilize are really referencing only the commoditized / pre-packaged / broadly followed ‘alt data’. Naturally - if everyone knows and uses something, there’s little alpha to extract. Data is info. There’s alot of info in the world. Only some of it is broadly used and competitive. There are no free lunches, but getting alpha out of data everyone knows about is a matter of brute force / resources - finding different data or using data differently is another way to extract alpha. It is a different challenge - but entirely viable
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