Tesla is a good example of why alternative data hasn’t helped the hedge fund industry as much as hoped - even if you knew sales or earnings in advance, it’d have been hard or impossible to make $. We live in cash flow from financing world, not cash flow from operations world
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Hmm is that true? Have never tested, but I feel like a portfolio which is long biggest future earnings beats, short misses, adjusted for size/sector, would do extremely well even over the last 2-5 years.
My response to “why hasn’t alternative data helped the hedge fund industry” is two-fold. First, much of the data is bad (eg low breadth, short history, poor data quality, not updated in a timely manner etc) or useless (already baked into earnings estimates or reflected in price)
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Second, it’s not true that alternative data hasn’t helped. Some of it has been and still is very predictive, you just need to know where to look (and have tested a lot of data sets out of sample).
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Would like to see results of the strategy in my first tweet though, as I may be wrong.
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