Invisage, a UK-based provider of data analytics and sales enablement solutions for the independent research industry, recently announced that it has added trading analytics and alternative data provider Samurai Data Analytics to its platform.
Invisage’s Latest Data Provider
Samurai is a provider of data analytics built by a team of former options traders, data scientists and market structure experts. Leveraging artificial intelligence (AI) with their team’s niche capital markets experience, Samurai produces cutting-edge trading signals and risk management tools that enable users to better define risks, identify opportunities and generate alpha. The firm’s core offering is a unique dataset – the Samurai Signal, which provides 5-day expected returns for over 4,000 US publicly listed companies.
In addition to the overall score, Samurai also produces signals for five sub-factors in their coverage universe. This includes scores for the sub-factors including Fundamentals, Relative Strength, Sentiment, Volatility, and Liquidity for each US equity. Consequently, Samurai provides 20,000 unique data points updated daily, and offers 10 years of historical data.
Using the Samurai Signal, Invisage created three portfolios which produced attractive returns and tracked the performance of these portfolios, including:
Total Market Strategy: Unhedged long-only strategy to hold the top 50 stocks everyday based on the signal, i.e. 5-day expected excess returns.
Thematic Healthcare Strategy: Unhedged long-only strategy to hold all the healthcare stocks across the entire coverage universe based on the 5-day expected excess returns.
Thematic Tech Strategy: Unhedged long-only strategy to hold all the TMT stocks across the entire coverage universe based on the 5-day expected excess returns.
Measuring the performance of the Total Market Strategy using Samurai’s daily signals over the past 11 years from Jan 2010 has produced 2,808% overall performance (annualized return: 34.98%) with an alpha of 17.5% over S&P 500 which returned 260% over the same time period. Sector thematic baskets for the Healthcare and TMT sectors have returned 2,455% (annualized return: 33.5%) and 1,642% (annualized return: 29%) respectively over the same period.
Transformation of the Invisage Business
Previously, we had written that Invisage was a UK-based research analytics platform that extracts actionable trade ideas from sell-side and independent research. However, the business has transitioned in the past year and is now also working with alternative data vendors to clean up their data, generate signals from this data, and track the performance of these signals in an effort to help these data vendors have a more efficient sales process.
For example, another data provider Invisage is working with is Stylophane. Stylophane is a leading digital marketing agency that works with leasing fashion companies. As part of its service, Stylophane tracks global fashion brands across various social media like Facebook, Instagram, Twitter, Pinterest and YouTube generating an exhaustive social media engagement data over the past 10 years. The firm realized this data could be extremely valuable to investors in the global luxury goods retail sector.
Consequently, Stylophane engaged with Invisage. Invisage combined the data from the various social media platforms, validated the data, matched brand data with tickers, developed signals from this data, and tracked the performance of these signals.
The best performing long-short portfolio constructed using the Stylophane data produced alpha of 8.39% over the S&P 500 over 10 years, while the best long-only portfolio produced alpha of 5.06% over the S&P 500 over the same period.
Currently, Invisage is working with a little over two dozen different types of firms like Stylophane or Samurai Data Analytics that produce and market alternative data. The firm continues to work with research providers to help them extract and systematically track the performance of their research ideas, as well as create and market unique datasets they use as part of their research process.
Our Take
The addition of Samurai Data Analytics to the Invisage platform is interesting as the dataset is more short-term trader focused as opposed to generating longer-term investment ideas. Despite this fact, the Samurai dataset is applicable for a broad range of investment related use cases including idea generation, conviction & position sizing, market timing, portfolio constructing and risk management.
Invisage’s recent pivot to work with alternative data providers in addition to traditional research providers also makes a lot of sense. Clearly, the past few years have been extremely difficult for sell-side and independent research providers, as the buy-side has dramatically reduced the amount they are willing to spend in this area. However, alt data has been a hot area where buy-side budgets for these providers have actually been growing, and the number of alt data firms has swelled to over 1,000 providers.
Unfortunately, Invisage may be a little late to the party as a number of firms have been providing data cleansing, signal generation, and performance measurement services to data consumers or to the data vendors themselves. Firms like Crux Informatics, Neuravest, and Elsen Systems all play in this space in one way or another. This doesn’t mean that Invisage can’t carve out a place in this market. It just means they need to establish a clear competitive edge to be able to gain significant traction.