A new alternative data platform aims to turn insights streamed from mobile phone locations into a source of returns for fund managers.
Could geolocation information gleaned from mobile phones be the next big source of alpha? At least one company is betting that it will.
Thasos, an alternative data platform founded out of the Massachusetts Institute of Technologys famed MIT Media Lab in 2011, is going live with a service offering insights culled from mobile phones broadcasting their locations in real-time, aiming to capitalize on fund managers seemingly unquenchable thirst for all things big data.
Called Streams, the service collects real-time data from mobile phones to deliver insights on such metrics as foot traffic in retail businesses, deliveries to loading docks, and hours worked on assembly lines. Using geolocation and artificial intelligence (AI) techniques, the service aims to shed light on whats happening in real time in particular businesses, specific markets such as real estate, and global economies.
Greg Skibiski, founder and chief executive of Thasos, says the company attracted about 25 hedge funds that wanted to work with the product before its official launch. Its also hoping Streams will appeal to other asset managers, governments, and companies.
[II Deep Dive: Not Just for Quants Anymore]
With widespread use of credit card data by a range of asset managers to get insights on retailers and trade on the information, Thasos initially focused on providing a validation or cross check for funds.
Its always sketchy if you only have one source for anything, says Skibiski. Measuring real-time foot traffic at stores, Thasos was able to provide signals on possible errors in credit card data. Once it had success with that, some hedge funds started asking for information on the number of loyal customers visiting restaurants, among other specific requests.
Thasos, which analyzes the largest number of location-broadcasting smart phones outside Google and Apple, has attracted some notable support. It counts MIT Media Lab co-creator Alex Sandy Petland as a co-founder and quant pioneers including Acadian Asset Management founder Gary Bergstrom and PDT co-founder Ken Nickerson as advisory board members. Nickerson is the company's biggest investor; Bergstrom is also an investor.
Skibiski says Thasos started working onsite at a major hedge fund three years ago to get feedback on its approach and to better understand what hedge funds want from alternative data platforms.
I was terrified to come out too early. The hedge fund world will destroy you, says Skibiski, who a co-founder and former CEO of Sense Networks, an early predictive analytics software firm.
Skibiski says Thasos is providing information for the first time on the number of people at any given moment in time at retailers like Dollar Store (where there is little use of credit cards), public hospitals, casinos, and even at lumberyards frequented by contractors, who get bills for the goods they purchase. Thasos says this information can give early indicators on the economy by monitoring how many people are working in the factories of the companies it covers.
Were measuring things that have never been measured before, says Skibiski. The firm asserts that the location data it collects has been volunteered, rendered anonymous, and aggregated to ensure compliance with legal and ethical standards.
To test the impact of its data, Thasos released a report earlier this month on never-before-tracked foot traffic at Real Estate Investment Trusts that invest in shopping malls. The report, released before second quarter earnings, was accurate in predicting the selloff that occurred after the announcements.