Original title: the Power of retail investors? Social media sentiment ETF is about to be launched, Wall Street has developed a system to track
What is the influence of retail investors in US stocks now? Too big for Wall Street to ignore.
Man Group Plc, the world's largest listed hedge fund, says it has set up a system to track hot topics on WallStreetBets on social platform Reddit.
In a conference call on Tuesday, Bloomberg quoted Luke Ellis, the chief executive of Ernst Man, as saying that managers of the company received detailed reports on the companies mentioned on WallStreetBets every day.
According to Ellis, the company, known for its quantitative analysis, will use "technology to solve investment problems that humans cannot effectively deal with".
After the outbreak of the battle for retail investors in US stocks, alternative data services have begun to become popular. In early February, Barron Weekly wrote that one of the great innovations of 2021 is a robot that can filter investment signals from emoticons (emojis).
In fact, some people are already trying. Dave Dave Portnoy, founder of Barstool Sports and a celebrity in the US social media network, posted on Twitter on Tuesday.New York asset manager VanEck will launch VanEck Vectors Social Sensitive ETF, a social emotional exchange-traded fund, on March 4, according to a video press conference on the website.
According to the Financial Times, the fund's benchmark index, Buzz NextGen-AI-US Sentiation Leaders Index, was used as a benchmark for SprottBuzz social media insight ETF, which was launched in April 2016. In 2020, the algorithm behind the ETF was 42 per cent more accurate than the S & P 500, according to Portnoy. Twitter of BUZZ indexThe index has outperformed the S & P 500 since its launch in 2015, according to accounts.
The ETF algorithm takes content from social media sites such as Twitter and aggregates them by monitoring more than 15 million online posts. Then, artificial intelligence is used to identify patterns, trends and mood changes, affecting market-based results. The fund trades 75 US large-cap stocks to identify stocks with the highest levels of optimism and bullish views in their portfolios. The portfolio ranks the basket of 75 stocks every month.
Portnoy says the ETF algorithm was created five years ago. The team behind the fund found him, he said. The fund will "rotate" its positions, which means that BUZZ will be an active ETF. Portnoy said:
"if you don't get used to it, you will die. Twitter, social media, all of which determine the stock price. "
Next, it is believed that there are more data tracking services and financial products based on individual investors. According to an earlier report by MarketWatch, Boris Spiwak, marketing director of Thinknum, an alternative data company, said the GME-related incident was a turning point.
Given that a large number of retail investors gather on the platform to discuss investment ideas, if customers use data services from companies such as Thinknum, they can not only profit from chatting on social media platforms, but also use it as a way of crisis management. At the same time, the demand from hedge funds is huge.
On Tuesday, the short-selling of US stocks repeated itself. Shares of Rocket Companies, the largest real estate mortgage company in the United states, jumped 71.19%, the highest since IPO in august 2020, on the back of a massive push by Reddit retail investors.
The data show that Rocket Companies is shorted by a large number of hedge funds and 38 per cent of outstanding shares are shorted. According to SwaggyStocks, a website that monitors WallStreetBets trends, the number of posts mentioning Rocket Companies on the section has increased in recent days.
Jim Cramer, a famous CNBC financial presenter, tweeted that Rocket had a good management and business foundation, and when 38 per cent of Rocket (tradable shares) was shorted, retail investors thought it could defeat the short side.
