EP13 - Advanced Alt Data

Advanced quant data strategies. Learn about building permits, earnings call NLP, job listings analysis, congressional trading, and how quants extract alpha from unconventional data.

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I'm spying on the future, Kurumi!

If I can figure out what store is opening here, I can buy the stock before the grand opening!

It's Chipotle ($CMG).

How?! The sign is blank! There are just steel beams!

Did you check the **Plumbing Permit** filed with the City Clerk 6 months ago?

"Installation of Industrial Grease Trap - Model X5."

Only three chains use the Model X5 grease trap. Chipotle, Panda Express, and Taco Bell.

Then cross-reference with the " HVAC Permit" for the specific square footage. Chipotle is the remaining suspect.

You... read the plumbing permits?

I don't. **My scraper does.**

We scrape the websites of 3,000 county clerks every night.

**Renovation Permits** are the Ultrasound of the economy.

We see the baby before it's born.

Look here. A spike in permits for "Home Offices" and "Swimming Pools."

Gentrification?

**Disposable Income**.

If people are upgrading their houses, Home Depot stock goes up. If permits stop, we short Home Depot.

So "Boots on the Ground" research is dead?

It's too slow.

By the time you see the bulldozer, the permit was stamped 90 days ago. The alpha is gone.

Okay, I'll listen to the Earnings Call! I'm good at reading people.

Don't listen to the *words*. Listen to the **Physics**.

His pitch frequency increased by 5Hz compared to last quarter.

His "Jitter" (Micro-tremors) is up 10%.

He is stressed.

Look at his sentence structure.

Last quarter: "We made $5 Billion." (Active Voice).

This quarter: "Revenue generation was impacted by headwinds." (Passive Voice).

He's using bigger words to hide the truth.

When executives lie, they use more adjectives. Our NLP models catch the change in "Fog Index" instantly.

Is that why every earnings call that mentions "AI" gets a 10% boost in stock price?

Not all strategies are **smart**. If it works we'll just keep doing it.

But that's just the *current* state. What about the future?

Job listings?

A company's budget is a secret. Their hiring is public.

"Wanted: 50 Solidity Developers."

What does this tell you about this legacy Bank?

They are... building a crypto platform?

Exactly. They haven't announced it. But the job ads don't lie.

"Hiring: McKinsey Consultant."

If a Retailer posts this...

Short the stock immediately.

We scrape LinkedIn, Indeed, Glassdoor.

If hiring slows down, revenue slows down 6 months later.

It's a **Leading Indicator**.

Permits, Voice Stress, Job Ads...

You guys are gathering so much data. How do you process it all? You need supercomputers!

We didn't just buy the supercomputers. We helped invent them.

Follow me to the **Server Room**.

What is that? A GPU?

It's an **FPGA**. Field Programmable Gate Array.

The "Hardware Code" thing from the HFT episode?

15 years ago, HFT firms needed to process trades faster than a CPU could handle.

So they poured billions into FPGAs. They built the compilers, the drivers, the networking stacks.

Now, Microsoft uses FPGAs to run search algorithms.

Telecoms use them for 5G towers.

The technology trickled down from "Greedy Traders" to "Global Infrastructure."

Formula 1 invents ABS brakes and Active Suspension to win races.

10 years later, your Honda Civic has them to keep you safe.

**Quants are the Formula 1 of Tech**.

So my fast Netflix stream...

Is partly thanks to a Quant who wanted to arb the S&P 500 in 2012.

Check out the routing algorithms of Content Delivery Networks (CDNs). They use the same **Graph Theory** we use to route orders to exchanges.

By trying to be faster than our competition for trades, we created the infrastructure that lets users distribute memes faster across the globe with low latency.

Do you know who the best trader in America is?

Warren Buffett?

**Nancy Pelosi.** Or rather, the US Congress.

Politicians?

By law, Congress members must disclose their trades.

But they file them as messy, handwritten PDFs to make it hard to read.

We run a script. It parses a handwritten PDF instantly.

**Senator X bought Military Stock 2 days before declaring War.**

That's... that's corruption!

That's **Alpha**.

And you trade on this?

Our profits **expose** it.

Quants built the trackers (like Quiver Quantitative) that let the public *see* this corruption.

Data is sunlight.

Before Quants scraped this data, nobody knew how bad it was. Now, there are ETFs that track politicians.

So... by trying to make money, you accidentally created transparency?

Incentives align. We want the data to trade. The public wants the data to vote.

The world *is* an operating system.

Most people are just Users. They click buttons.

Quants read the Source Code.

Let me guess. You track the truck's GPS to predict Amazon earnings?

No. We track the **weight** of the truck via tire depression sensors at weigh stations.

You do that?!

Just kidding. Quants probably haven't used that data to trade.

Hah! It just means that alpha still exists for those who are early.

The alpha is in the details.