PANEL - Artificial Intelligence and Alternative Data: the latest trends in hedge funds and PE/VC
Channel: Beryl Elites
Date: 2018-12-28

BERYL KNOWLEDGE CENTER

Artificial Intelligence and Alternative Data: the latest trends in private equity, venture capital, and hedge funds
 
❖ Peter Marber Ph.D. - Aperture Investors  ❖ Sameer Gupta - Point72 ❖ Robert Fagin - Cowen and Company  ❖ Eric Yu - GTCOM

- Robert Fagin
"I've seen lots of different waves. Data is a wave that I think has just begun. It is very nascent so just to put it into perspective, when you look at dollar sales, its fairly low right now. It's just the beginning of the wave and somehow analogous to back in the 90s when expert networks came on the scene nobody had a foresight other than a few people to recognize that this would become a billion-dollar business.  Data is very similar to that. I would also say not all data is created equal and our clients are beginning to experiment and are finding that. They are beginning to be much more discerning for the data that they buy and they accept. I think it is important to keep in mind that data is really a just tool, we need to be asking the right questions and understand how to manipulate it and how to apply into your investment process. Our research department is very large and we noticed last year that our buy-side clients were starting to ask for certain data sets that our research analysts had developed and we started a division that's really designed to commercialize and monetize some of the data sets that we developed internally as well as bring to market some third-party data sets that we partner up with in order to help our clients make better decisions." 

"There are new data sets all the time and the issue now is that there aren't a lot of good data sets. Data has to be clean, has to be correlated to stock results. There are all sorts of flaws in wave one of what we are seeing in the data market. If you look at the list of alternative data vendors very few of them check all the boxes that the buy-side requires for high quality correlative data." 

"There are lots of experiments out there for true artificial intelligence. What you are talking about is autonomously having a machine make unbiased predictions. What is the most important is asking the computer to break down traditional boundaries is what actually drives securities and having a machine try to find new correlations, new relationships that perhaps human beings didn't know about. The smarter the artificial intelligence gets, the more it converges, so it becomes predictive. It is very difficult to keep pace on true artificial intelligence. Everyone is in the AI game, certainly the amount of computing power that you need to process this stuff is a huge factor so simply being able to put it in the cloud and rent computing time on demand is a massive innovation without which none of this could happen."

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- Sameer Gupta
"About ten years ago investors mostly cared about fundamental data of a company. Fast forward, we are all emitting data now through our mobile devices. Five years from now semi-autonomous will take over in cars and that will be a lot of data. And that is Alternative Data which is away from your traditional stuff that's coming from all angles, that's coming literally from 360 degrees view. If done right it can simplify an abstract what's going on in a very simple dashboard for you thereby augmenting human intelligence. In doing so, this data quickly evolve and therefore the feedback loop is very important. That is the differentiating factor of AI, this feedback loop and ability to learn in unsupervised fashion."

"I don't think there is an AI that says buy or sell this stock. There is an AI, integral calculus that forms a digital mosaic for the human to become really smart. Social media has been used by pretty much everyone so you know that's meaningful data that you must look at if you are investing. I think the days of sell-side being the information conduit are gone and I think it is a very democratic world. Thankfully there are advances like AI which help you do that job."

 - Eric Yu
"In 2014 we started working on machine translations, so we are one of key players in China and similar to Google Translate and Baidu Translate. We are providing vertical machine translation solutions globally. In 2015 we started working on big data and we also begun working on alternative data and providing our products and services to some of the biggest name on Wall Street as well as back in China."

Copyright 2019 The Beryl Consulting Group. All Rights Reserved.