By Max Bowie
Inside Market Data
Feb 27, 2012
Titan Trading Analytics, an Atlanta, GA-based provider of trading strategy signals based on behavioral research, has added two new sources of sentiment analytics—Insider Insights and Recorded Future—to the behavioral information it makes available to clients.
Titan chief executive John Coulter says the vendor receives updates from Insider Insights on a weekly basis and Recorded Future as events occur, and incorporates these as additional values on its feed of signals.
“We have our models based on price, volatility and our suite of algorithms, then we take the unstructured data and use it as an overlay, by adding an alerting column… so we can serve up sentiment changes and upcoming actions within our signal stream,” he says. “We provide these as separate information that is not readily available, intended to round out a trader’s decision-making process.”
Jonathan Moreland, director of research at Insider Insights, who started collecting insider deal data to support his own fundamental research and trading activities, and then began selling the results to offset his research costs, says insider deals provide an indicator of a company’s—and its executives’—confidence in its own stock, which, in conjunction with other research, could be factored into investors’ decisions.
“Especially in this uncertain market, if you are willing to increase your position in your company, that’s saying something,” he says. “I’ve always thought the behavioral science of insider data was under-rated… so combining Titan’s behavioral signals with ours made perfect sense.”
Insider Insights also specifies whether deals were traded on the open market, and even whether a sale indicates lower confidence or is to cover the capital gains tax on any increase in the value of their holdings, Moreland says, adding that the vendor is considering moving to daily data delivery by automating some of its processes.
Recorded Future creates so-called “temporal analytics” by scanning public sources of news and information to generate timelines for individual companies and capturing any mentions of future events, then predicting the impact of that event on securities prices based on historic performance around similar events in the past.
David Moon, head of financial services at Recorded Future, says the company began working with Titan around six months ago—having only targeted its predictive analytics at the financial services industry for around a year, after initially serving government intelligence agencies and corporations with competitive intelligence—and began a proof-of-concept project before making its future events, momentum and sentiment scores live via Titan’s interface late last year.
“If you can quantify and score news and other media, you can provide another view of what’s happening to a company,” Moon says. “Titan came to us saying there is too much news out there, and they were looking for a way to boil down news to just a couple of indicators. They wanted to incorporate our sentiment and momentum [data] into their signals, and incorporate our events.”
Moon says Recorded Future is talking to other third-parties about incorporating its content into their platforms, adding that Titan is “furthest along” in using it, while almost a dozen firms—mostly hedge funds—are already using Recorded Future’s data for trading.
Though these indicators, and other inputs from social media sources, may not be mature enough to serve as standalone indicators, Titan is “bullish on social media sentiment and predictive analytics in general,” Coulter says, adding that they provide “value-added indicators around our own data, which proprietary traders looking for ideas can use as a heads-up.”
Separately, Coulter says the vendor is in discussions with clients about expanding its coverage to international markets depending on customer demand, such as Latin America—including BM&F Bovespa in Brazil and Mexican stock exchange Bolsa Mexicana de Valores—and the London Stock Exchange, which Titan aims to support by year-end, as well as Japan. In fact, the vendor is already in talks to provide Japanese tick data to one client, he says.