How alternative data went from a ‘nice-to-have’ to 

a fundamental piece of company information

We have to admit, we completely empathize with the list of reasons why an investor may be hesitant in adopting the use of alternative data in their process:

“We don’t use outside research”

“We are a bottom’s-up, fundamental shop”

“We don’t have the time to use alternative data”

“We need a data scientists”

…just to list a few.

These are excuses that sound very similar to the dismissals that Blockbuster threw at Netflix…’this will never work’. Well we all know the end to that story.

Today, the problem is that many modern investors fail to grasp that the financial markets have moved on from the traditional ways that companies are valued, . The fundamental metrics that drive financial success or failures of a company are no longer limited to a 10K or information that the company reports.

Even more, because of the proliferation of data that can be accessed about companies, in parallel with the democratization of who can access this data, the market has actually started pricing in many of these new sources of information.

For example, how could someone invest in an e-commerce company without knowing the patterns of web traffic to the companies online marketplace?

How could someone invest in a potential growth company without understanding their hiring patterns?

How could an investor claim to be an expert on a retail company without knowing what type of foot-traffic happens around its stores.

But this is just the start!

Today’s markets have herds of new participants, such as the retail market, who are no longer just putting money into savings accounts managed by their family wealth advisor. The advent of wealth tech trading platforms, embedded in people; phones and readily available in the palm of their hands, has weaponized stock trading. Anyone can now relax at a coffee shop and sit on their phone, flipping between their Reddit and Robinhood apps, and literally be part of market-moving strategies that are then amplified or killed by larger asset managers and electronic trading algorithms. 

All this is to say is that the financial market is no longer a simple place where investors can stick to their right-hand lane of traditional due diligence and genuinely expect to get to their destination. Especially when driving towards the cliff following a historic bull market, soaring inflation, and staring down the barrel at a barrage of rate hikes. 

As the saying goes, don’t bring a knife to a gunfight. Investors need to understand that the cost of doing business, investing, now includes the use of alternative data. The days of turning a blind eye or thinking of this as a luxury item that rich firms can freely blow their money on are over. 

To conduct fundamental, bottoms-up research on public market companies, investors invest in the ability to use various alternative data sets and integrate them into the investment process. 

This is much easier said than done…but that is why we are here ;)

About Lagoon

Lagoon is an intuitive data tool for the modern professional investor, enabling them to seamlessly focus on the relevant and reliable data-sources, to build and monitor specific data KPIs critical for investment analysis and risk hedging. 

With over 50 data sources such as web traffic, web scraping, credit cards, foot traffic, social media, app data and more…and built as an easy to use solution to generate insights and signals from the data…Investment professionals can efficiently zero-in on opportunities and risks by using a combination of tools & expertise to analyze overwhelming volumes & varieties of data.

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FAQs

Alternative data is any data other than traditional financial data that an investor can use to better inform investment decisions. Examples include app usage, geo-location, website traffic, social sentiment etc…

Industry-leading firms, like Blackrock, Citadel, and Renaissance Group are already using Alternative data to guide their investment strategies. They achieve higher returns and alpha by leveraging prohibitively expensive proprietary datasets, teams of data scientists, and virtually unlimited research budgets to craft their investment strategies.

Lower than the industry average. Our mission is to level the playing-field and eliminate unfair advantages. That means giving equal access to cutting-edge data at a fair price point.
NO! Anyone can use Lagoon. Our platform is accessible to everyone, yet sophisticated and powerful enough to unlock the promise of alternative data in capital markets.