Agoracom Blog

Small-Cap CEO Lesson: Hedge Funds Are Now Monitoring Blog Posts As Part Of Their Black Box Trading

Posted by AGORACOM at 2:58 PM on Thursday, May 13th, 2010

Image Courtesy Of Amazon

Algorithmic trading – better known as black-box trading, algo trading and robo trading is widely used by pension funds, mutual funds and some hedge funds to generate and execute orders automatically.  These black boxes take into account almost any piece of relevant data you can think of, analyze them every nanosecond and execute trades accordingly.

According to this article from IR Magazine, Hedge Funds are now testing the addition of a very different element within their black boxes – a data feed produced by monitoring a group of financial commentators that includes bloggers.

The feed – put together by Alacra, a data aggregator – monitors the output of around 25,000 analysts by combing the web for their comments. This group contains a number of prominent bloggers, such as Barry Ritholtz (AGORACOM Online Conference Keynote Speaker), Henry Blodget, Felix Salmon and Fred Wilson.

(Another AGORACOM Online Conference Keynote Speaker, Paul Kedrosky, is also included in the list)

That’s right, they’re moving beyond raw data, bits and bites to include the written words of bloggers. Why?

“The trial is still at an early stage, but it shows how seriously the investment community is
taking the opinions of those working outside traditional media outlets.”

What is the Small-Cap CEO Lesson Here? If Hedge Funds believe bloggers are worth listening to when evaluating the markets at any given second, what are you doing to have your voice heard?  To be clear, I doubt the blog of a small-cap company is ever going to be included within Hedge Fund black boxes – but I unequivocally believe that small-cap investors would love to hear from you as they make their investment decisions.

(Hat Tip to Barry Ritholtz)


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