Investors who know where to look can find a wealth of online data to “mine” for insights – from Amazon’s price points to consumers’ tweets about Apple’s iPhones. Our Grassroots℠ Research team is scouring these and other “alternative” data sources as part of our proven approach to active investing.
Our Grassroots℠ Research team is finding new ways to mine publicly available “alternative” data sources for investment insights
We compared thousands of data points from Amazon and other retailers to help our portfolio managers better understand companies’ pricing models
Analyzing thousands of tweets about Apple’s iPhones helped our investors understand consumers’ preferences and estimate product sell-through
For more than 30 years, our GrassrootsSM Research team – Allianz Global Investors’ proprietary in-house research division – has aimed to help our investment professionals identify stock and sector trends before our competitors do. Used in conjunction with our firm’s traditional fundamental research capabilities, these GrassrootsSM insights form a key part of AllianzGI’s distinctive approach to active investment.
Recently, our GrassrootsSM team has added innovative new tools to our information-gathering toolkit. In addition to conducting one-on-one in-depth interviews with industry experts, and running detailed surveys of consumers that reach across multiple regions, we have been exploring new ways of extracting “alternative” data sets from the web.
Going deeper with the data
Broadly speaking, alternative – or non-traditional – data sources can consist of anything from credit-card data that can be “mined” for underlying shopping trends, to social media sites that can be “scraped” for shifts in consumer opinions. More of this data is available to investors than ever before, and much of it – particularly web data – exists fully in the public domain.
With so many places to turn for answers, the real challenge is knowing where to look, what questions to ask and how to analyze it to glean useful insights. This is where our GrassrootsSM team’s experience running more traditional market research studies comes into play. By working collaboratively, our researchers and investment professionals can select which types of alternative data would be most relevant to – and appropriate for – a portfolio manager’s investment process. Here are two examples.
Price-point research using data scraping
As the world’s largest ecommerce company, Amazon.com publishes an unprecedented amount of publicly available web content. To gain insights into retail pricing models, our GrassrootsSM team pulls thousands of data points to compare the prices of products offered by Amazon against the same products offered by other online retailers. You may be surprised to learn that Amazon is not always the cheapest option: many times, a company will make its own product available for less on its own company-branded site. Conducting such a thorough price comparison helps our investment professionals better understand how specific retailers are positioned against the significant online threat from Amazon and competition from other firms.
This kind of web-data extraction is also effective in comparing product rankings, studying customer ratings and analyzing consumer reviews across multiple sites.
Product-sentiment analysis using social media
To find out how consumers feel about new products, our GrassrootsSM team has tapped the power of social media – in particular, by focusing on platforms where people share their opinions in full public view.
Recently, we examined a week’s worth of tweets to detect consumers’ views on Apple’s iPhones. After searching thousands of posts and aggregating the results in distinct categories, we used specialized coding tools to sort the language into positive or negative mentions. We then assigned a confidence score based on whether the tweets were voted as positive or negative.
From our analysis, we learned that the tweets for all but one of Apple’s iPhones had an overall positive score, with a confidence level of 80%. The exception was the iPhone 8, which received an overall negative score, with a confidence level of 60%. This insight indicated a potentially lower sale rate of the iPhone 8 compared with other iPhone models, including the iPhone 8 Plus and the new iPhone X, and provided our investment professionals with a tool to help better understand unfolding consumer sentiment and estimate product sell-through .
Sifting through data for actionable insights
Gathering and analyzing data from multiple sources has always been a cornerstone of Allianz Global Investors’ commitment to proprietary research, which is an essential part of our active approach to investing.
That’s why the GrassrootsSM Research team is continually looking for new ways to mine alternative data sources – particularly the vast amounts of information publicly available online – for true insights. We also work closely with our investment professionals to test those insights in the real world through further studies and analysis.
“With the internet functioning as a massive repository of open-source data,” says Global Director of Research Gunnar Miller, “we believe that web-data extraction and other ‘big-data’ approaches are great additions to our global research platform. Finding new ways to draw investment conclusions from appropriate information sources is a natural extension of our firm’s long-standing commitment to active management.”
Some or all the securities identified and described may represent securities purchased in client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. The securities or companies identified do not represent all of the securities purchased, sold, or recommended for advisory clients. Actual holdings will vary for each client. Amazon is the world’s largest ecommerce company. Apple is the world’s largest company by market capitalization.
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Central banks should pay more attention to asset-price inflation, and investors should consider real assets as an inflation hedge and diversifier