By Apurv Jain Neil Seeman 05-02-2020
In: deep-dives | US

Privacy vs. Alpha: Is The Trade-off Real?

(7 min read)
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Imagine you are the CEO of a well-known asset management company. You are sitting in a meeting with a new data vendor, your new portfolio manager (PM) who is an expert in alternative data, and your compliance officer.




The Food Data Pitch

The data vendor has data showing exactly what each public company’s CEO and all their workers ordered for lunch every day since 1 January 2011. He shares a case study where, using the patterns in the food data, their proprietary signal successfully predicted an impending merger of company X that had been shopping for strategic partners, with conglomerate Y. The senior management of public companies X and Y started eating more steaks, fries, and pizza three months before the actual successful merger. The vendor’s resident food scientist — an authority in the field, shows convincing and intriguing studies about protein, sugar, and fat correlations with dopamine receptor activity and about how changes in senior leadership’s food consumption patterns might signal important business events on the horizon. Even if the exact event remains unpredictable, buying options ahead of time that gain value when the volatility and activity in X and Y increase after the news breaks officially could be profitable.

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