Using Alternative Data as a Long-Term Investor
Why should long-term investors use alternative data?
The complete picture of a company stretches far beyond the latest financial statement, corporate communications, and channel checks. Long-term investors aspire to have the most in -depth understanding of the companies in which they invest. Alternative data can help you build and track the most granular investment thesis - allowing you to back your winners and drop your losers.
What is alternative data?
Alternative data is any information gathered from non-traditional sources - outside of financial statements, management presentations, and pricing data. This includes web-scraping, email receipt and credit card transactions, mobile application downloads, among many others. A common misconception is that alternative data is used to track inflections in top line sales or order metrics at a higher frequency - it is actually equally adept at providing key insights into customer, category, and competitive trends that develop over longer periods and can lead to sustained market leadership.
How are Long-Term investors currently using alternative data?
70+ Long Only managers already use YipitData as their outsourced insights team to analyze billions of data points and distill the signals from the noise to answer their key investment questions. The multiple alternative datasets that YipitData cleans, collates, and combines give long-term investors the information to conduct differentiated analysis on:
Unit Economics - We can partition customer cohorts by join date or demographics and follow their entire lifecycle across multiple merchants - giving key insights into retention, customer spend, and cross shop behavior.
Order Granularity - Our proprietary web scraped data and first-party email receipt panel are often granular down to the item levels - helping investors drill into key strategic initiatives and track category mix shifts before management reports on them.
Competition - Competitive intensity is a key theme across all industries. Our research includes numerous multi ticker reports, in industries including Streaming Video, Ridesharing, and Cloud Computing - offering insights into marketshare shifts and relative performance
Management Team Verification - Verify management teams comments on strategic initiatives and prepare to ask all the necessary questions of management teams
Alternative data is not just about short-term decision making, it provides the most in-depth understanding of the companies long term investors care about and transparency into operations, performance, market share, competition, and more. Learn more about how alternative data can help with your investment process.
