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In Search for Alpha, Hedge Funds Focus on the (Really) Short Term

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dove satellites

Dove satellites built by Planet Labs

Hedge funds and market speculators are known for focusing on the short-term. Guessing whether or not a company “beats” or “misses” it’s quarterly earnings guidance numbers, and by how much, has become a parlor game critical to the strategies of many funds and traders.

But with a digital revolution that has produced a cascade of data for investors, hedge funds and others are focusing on very short-term information to paint a broader picture. A new venture called Planet Labs is capitalizing on the short-term data trend by launching a group of mini-satellites used to keep tabs on parking lots, docks, and farms to measure economic activity.

The Wall Street Journal’s Bradley Hope reports that hedge funds are eager to expand the use of this technology to add daily information to their data driven strategies.

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A company called Planet Labs Inc. has launched a small constellation of what it calls “cubesats” that can deliver much more frequent imagery of economically sensitive spots than traditional satellites. Those spots include retailers’ parking lots, oil-storage tanks or farmland.

The company, founded by three former NASA scientists, has now signed an agreement to supply data to Orbital Insight Inc., which mines satellite imagery for trading tips for hedge funds.

Until now, Orbital has relied on monthly or bimonthly imagery for its analysis. The deal with Planet Labs will give them access to weekly images at first. Next year, if Planet Labs succeeds in a plan to launch another 40 or so cubesats, Orbital will have access to daily images of every piece of land on earth.

“Almost all economic activity is change,” said  Jimi Crawford, a former Google executive who founded Orbital. “Once you get down to daily images, tremendous new horizons open up to being able to monitor and track that change.”

Planet: See Change. Change the World.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.
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