YipitData, an alternative data offshoot of website aggregator Yipit, is developing fundamental research as it expands its research analyst staff, following the path of alternative data pioneer Majestic Research, now M Science. YipitData is a example of an owner of proprietary big data successfully expanding its business lines into investment research.
YipitData collects web data to analyze the operating performance of public and private companies. As the company has grown, it has expanded coverage to include asset managers, auto retailers, China and US internet companies, hotels, online retailers, online lenders, OTAs, social media firms, softline retailers, real estate, and online software firms.
Yipit was founded in 2010 as an aggregator of online daily deal sites. Soon after, hedge funds interested in investing in daily deal sites approached Yipit to request data on deal prices and quantities sold. By 2014, Yipit had built a large hedge fund following and decided to launch YipitData to collect website data on a broader set of online companies.
Expansion into the financial sector wasn’t an alien concept because the two Yipit founders, Jim Moran and Vinicius Vacanti, had both worked as analysts at The Blackstone Group. Thus, when the hedge funds came knocking, they were quick to see a business opportunity.
In the two years since it launched, YipitData’s team has grown from 2 to 60 people, and the firm continues to hire aggressively. In its recruiting materials, it says it has increased revenues 3x over the last year. The firm says its client base is around 60 funds and that its subscribers include 30 of the top 50 largest hedge funds and long-only investors.
YipitData’s product, using publicly-available data on company and other websites, has expanded to include reporting on company metrics, assessing progress of long-term strategic plans, providing data around company developments and informing investors on trends in the data.
The firm’s emphasis has been to expand its data coverage, and it employs around 17 data product analysts responsible for managing the data products. It is beginning to leverage data sources other than company websites. A recent example is analyzing large files submitted daily by Lending Club to the SEC’s website, a data set also tracked by alternative data rival Thinknum.
The firm is now expanding its research capabilities. The firm has hired five research analysts with buy side and sell side backgrounds. The analysts have experience from hedge fund River Cliff Capital, Hurley Capital, Fred Alger, Goldman Sachs and Credit Suisse. Dan Pellegrinelli was an equity research associate at Goldman Sachs covering 25 companies in the Communication Services industry before joining YipitData as a data analyst, then moving into a research analyst position late last year. Ryan Sullivan was a Senior Equity Research Analyst at Credit Suisse covering asset managers before joining YipitData in January 2016.
YipitData is recruiting for an additional equity research analyst “to develop a fundamental research function on top of our popular subscription data product”. The firm is also looking to hire a VP of Sales and a salesperson experienced in “selling contracts at $100k+”. The firm also has an opening for a sell-side analyst experienced in “communicating complicated company insights to investors” who will act as a sales specialist.
Our Take
YipitData’s evolution has been to leverage its initial hedge fund client base by expanding its data product offerings. Now, as the product offering has begun to scale, it is adding a research overlay, as well as looking to grow its customer base through sales and marketing.
In hiring experienced equity research analysts, YipitData is following the footsteps of alternative data pioneer Majestic Research, recently spun out from ITG and rebranded M Science. A year ago, Dublin-based Eagle Alpha embarked on a similar strategy, and 7Park Data is following a similar path. Equity research analysts help to broaden the client base to more mainstream fundamental clients who may have limited data mining capabilities.
YipitData is an example of backward integration by large-scale data owners into the investment research space. As alternative data becomes more embedded in the investment research process, we can expect more alternative data firms to follow YipitData’s path. And, as machine learning becomes increasingly powerful, barriers to entry such as hiring experienced equity research analysts will come down.