Datt Capital has highlighted the benefits of using ‘alternative data’ in stock selection, a process used on its Absolute Return fund.
Alternative data, the firm said, consisted of metrics including website traffic, industry statistics, online reviews, discussion forums, background checks on management and shipping documentation. This was in addition to the traditional financial checks such as profit/loss and P/E ratios.
It was particularly useful for consumer companies where much of this information was held in the public domain and the company highlighted trading platform Selfwealth and candle company Dusk Group as two where they had used alternative data.
Datt principal and managing director, Emanuel Datt, said: “During the March 2020 downturn, we developed an interest Selfwealth. We were aware of high trading volumes on the Australian Securities Exchange [ASX] and observed that Selfwealth was capturing a disproportionate amount of web traffic relative to its claimed market share.
“In addition, all web metrics were substantially higher each day, implying high engagement, which we believed would translate into higher revenue for the company. We were able to track this growth over time relatively easily and today Selfwealth has grown to become the largest non-bank online broker in the Australian market.”
Meanwhile, for Dusk Group, the company was able to track ‘electronic footprints’ to ensure the company had sufficient systems in place to support future growth at low cost.
The firm said it expected equities would remain resilient this year despite rising bond yields and that Government stimulus would prop up economies, leading to inflation in real asset classes.
