Alacra: Hedgies Monitoring Blog Posts

Hey, this is quite interesting:

Data firm monitoring influential blog sites

Hedge funds are testing out a data feed produced by monitoring a group of financial commentators that includes bloggers. The trial is still at an early stage, but it shows how seriously the investment community is taking the opinions of those working outside traditional media outlets.

The feed – put together by Alacra, a data aggregator – monitors the output of around 25,000 analysts by combing the web for their comments. This group contains a number of prominent bloggers, such as Barry Ritholtz, Henry Blodget, Felix Salmon and Fred Wilson.

Hedge funds are taking that feed, mixing it with other data, and using the combination to try to create successful algorithmic trading strategies. So far, the data suggest stock prices outperform when sentiment at a given company has been positive for a number of weeks.

Alacra tries to differentiate itself from other data aggregators by monitoring only a select group of what it feels are influential sources on the web. It also hones in on quotes to analyze sentiment, as it believes this is more accurate than analyzing the language of a whole article.

Way cool . . .

Blogger output helps hedge funds to trade
Cross Border, May 04, 2010

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