Filtering Out the Noise on Wall Street10.31.2014
Wall Street has been inundated with information from the web and from social media, but much of it is ‘noise’ that has little or no value in traders’ decision-making processes. Eagle Alpha, a two-year-old company, is working to separate the wheat from the chaff with regard to actionable intelligence for traders.
“The world’s biggest information resource is up in the cloud and on the web, and today Wall Street simply isn’t taking full advantage of all that information and data,” said Emmett Kilduff, founder of Eagle Alpha.
Kilduff, a former investment banker in equity capital markets at Credit Suisse and Morgan Stanley, and the son of a successful technology entrepreneur, said he always wanted to follow in his father’s footsteps, and his inspiration came in the form of an article in the Sunday Telegraph in the U.K., written by a hedge-fund manager.
“The article said it’s time investment analysts took advantage of social media and he gave lots of examples within that,” Kilduff said. “That was my mini- ‘eureka’ moment.”
Eagle Alpha “curates the web for Wall Street, which means we look for actionable information across the entire web to give to our clients,” said Kilduff.
That includes not just Twitter, but sources such as Weibo in China, as well as blogs and chat rooms.
“It’s our job to find actionable information on the web no matter what the source is,” he said. “The difficulty with that is that there’s an incredible amount of noise on the web and we have to filter out the noise so we just give actionable signals to our clients.”
Eagle Alpha employs both technology and humans to accomplish this. It uses a wide range of technologies to filter and distribute relevant data, including both licensed software and proprietary tools like an algorithm that identifies the top influencers to follow on Twitter for any stock or topic.
Technology only eliminates some of the noise however. Eagle Alpha currently employs 11 research analysts, all of whom have buy side and/or sell side experience.
“In order to fully eliminate noise we believe that human judgment is required,” Kilduff said. “They have six screens each, but they don’t look at anything traditional like sell-side research, Bloomberg or Reuters. They use tools and technologies to help find interesting data and information. That’s what we give to our clients.”
In its two years of operations, the company has garnered more than 40 paying clients to date across a mixture of sell side, buy side, and interdealer brokers.
“Capturing relevant and actionable information in a timely manner from the web has become impossible without intelligent technology. Eagle Alpha’s Web Watch offers an innovative solution that adds value to clients with a simple and scalable business model,” Roberto Hoornweg, one of Eagle Alpha’s new investors and former co-head of global fixed income at UBS, said in a statement.
Added Kilduff, “Clearly the people that have invested in Eagle Alpha are all incredibly well-connected on Wall Street and they understand our concept, our vision and can see the use case given their experience. That’s a real vote of confidence for what we’re doing.”
Featured image via Wikimedia Commons
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