Lombard Odier Investment Managers, the institutional asset management business of the Lombard Odier Group, has launched DataEdge, a market-neutral alternatives strategy that uses big data analysis and systematic investment expertise to identify trends in consumer behaviour and their impact on company earnings forecasts, capturing alpha opportunities for investors.
The strategy analyses alternative data from credit card transactions, digital receipts, web traffic, app activity, and geolocation services across various geographies and sectors. This data is structured and filtered to identify real-time consumer behaviour trends.
The strategy launched three years ago and is now opening for the first time to external investors and in a Ucits format.
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Systematic and quantitative analysis methods are then applied to predict how patterns could impact the KPIs of listed companies, such as sales, revenues and new customers, as well as to track inflecton points in the trends of KPIs over several quarters. According to the investment manager, this ‘information edge’ improves the forecasting of company results, to better predict earnings surprises and capture alpha potential.
The strategy focuses on US small to mid-cap companies in the consumer, technology, industrial, and healthcare sectors. It monitors nearly 700 companies daily to build a contrarian, diversified portfolio of 200-250 active stocks, targeting alpha potential from divergences between company results and market expectations.
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Jean-Pascal Porcherot, co-head of Lombard Odier Investment Managers and managing partner at Lombard Odier, commented: “With the DataEdge strategy, we are combining tested, disciplined investment processes with new data sources to offer investors a differentiated market-neutral strategy and compelling potential returns.”
