Alternative Data Researcher M Science Applies Machine Learning To Transaction Data

M Science, the alternative data research provider originally known as Majestic Research, launched a machine learning product which analyzes credit and debit card transaction data.   The new capability enhances its new data visualization platform as well as deepening its data offerings for consumer companies.

M Science’s new SWIPE product uses machine learning to calculate five key metrics derived from transaction data – aggregate spending at a company level, unique customers, number of transactions per shopper, average ticket, and a proprietary estimate of a company’s revenue (labelled the ‘M Science Index’).  Metrics are available at daily, weekly, monthly and quarterly intervals with values being updated daily.

Overall data coverage is 600+ brands associated with 499 companies of which 230 are publicly traded.  Current coverage for the M Science Index revenue forecasts is 48 publicly traded tickers.

The company backtested its M Science Index metrics, deriving median absolute percentage errors ranging from .95% to 5.83% at the company level.  Error levels are provided for each company covered.

Besides the five core metrics, the new offering includes additional features such as state-level sales, dollar flow analysis (analyzing sales lost or gained relative to direct competitors) and market share analytics.  Data is also aggregated to sector or sub-sector levels, such as an index of auto-parts sales.

Transaction data normally has around a two-week lag caused by processing at the source level.  SWIPE produces actual values with a 14-day lag and forecasts future daily transactional behavior, effectively reducing the lag to eight days.

The new SWIPE data has been integrated into M Sciences data visualizaiton platform launched in January 2018.  The transaction data is used to create company dashboards which integrate the SWIPE metrics.  M Data Viz also allows customized views of the data, such as pivots, comparisons and zooming in/out on time horizons.

M Science is the rebranded offspring of alternative data pioneer Majestic Research, which was founded in 2002.  Majestic Research introduced the concept of selling primary research based on large commercial databases which Majestic typically licensed from suppliers on an exclusive basis.  Sectors covered include auto retail, casinos, consumer technology, cruise lines, eCommerce, and lodging.   Majestic added analysts to provide clients with insights based on the information, without buy/sell/hold recommendations.

The firm was sold to ITG in 2010 and disposed by ITG in a fire sale to Leucadia National in 2016.  The company is headed by CEO Michael Marrale, who joined ITG as head of its Research, Sales & Trading group in 2012 from RBC Capital Markets.  According to COO Joseph Napoli, the firm employs 85 full-time staff, totaling 110 employees when offshore teams are included.

In June 2018, M Science acquired TickerTags, a company that mines social media data tracking keyword mentions mapped to nearly 3,000 public and private companies.

Our Take

Transaction data is perhaps the most commoditized component of alternative data (other than social media sentiment analysis).  Nevertheless, the reason it is ubiquitous is that it has become essential to analyzing consumer-related stocks.  M Science is not the only vendor to seek to enhance the core transaction data, but its machine learning application provides systematic ancillary data and analysis which will generate new interest in data otherwise taken for granted.