Wednesday, 05 May 2010 16:42

Hedge Funds Paying to Follow Bloggers: The Shift in Media Influence Continues

Here is an interesting article from thecrossbordergroup.com: Data firm monitoring influential blog sites

Hedge funds are testing out a data feed produced by monitoring a group of financial commentators that includes bloggers. 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.  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, Henry Blodget, Felix Salmon and Fred Wilson.
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‘The feedback has been good so far,’ says Steve Goldstein, CEO of Alacra. ‘The challenge is low frequency. There are fewer than 200 companies worldwide with enough data to make sentiment-based trading decisions.’
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Other bloggers being monitored by Alacra include:
Howard Lindzon – HowardLindzon.com
Ken Doctor – Content Bridges
Michael Parekh – Michael Parekh on IT
Paul Kedrosky – Infectious Greed
Rafat Ali – Paid Content
Roger Ehrenberg – Information Arbitrage.

Hey, I guess I'm not a prominent blogger :-)

This does show the increasing influence the blogosphere is having. Reference the Crain's NY article from last week: Are Blogs Truly Competitive With the Mainstream Media in Terms of Quality of Content?

  • Mr. Middleton’s Boom Bust Blog forecast with stunning accuracy the demise of such real estate bubble blowups as Bear Stearns and mall operator General Growth Properties… Now he’s embarking on his next project: Turning his blogging hobby into a full-fledged investment research business, a firm where he says investors will get “realistic” insights as opposed to Wall Street puffery. Mr. Middleton plans to start petitioning venture capital firms, private equity players and established media companies in the coming weeks.

“His work is so detailed, so accurate, it’s among the best in the world,” says Eric Sprott, CEO of Sprott Asset Management, a Toronto firm that manages about $5 billion and subscribes to Mr. Middleton’s research.

Finding investors won’t be easy, though. A few bloggers have landed backers recently, including Footnoted.org, acquired by investment research firm Morningstar, and Gothamist.com, by Cablevision. But most media concerns and venture capitalists have steered clear. Many blogs’ revenues are scant, with few opportunities to grow and churn out the $10 million to $15 million in revenues that venture capitalists want. “The climate for blogs is almost always lousy,” says Roger Ehrenberg, founder of IA Capital Partners, which has invested in BlogTalkRadio and BusinessInsider.com.

Last modified on Wednesday, 05 May 2010 16:42

8 comments

  • Comment Link hmc Thursday, 06 May 2010 17:16 posted by hmc

    I was lucky enough to purchase BBVA July 17 $12.50 PUTs at $1.70 yesterday morning and they are already up around 100%... damn I wish I had bought more contracts! I know you don't want to give financial advice; but would you get into more of these above $3.00? Thanks again.

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  • Comment Link Reggie Middleton Thursday, 06 May 2010 11:54 posted by Reggie Middleton

    Check the puts on those Spanish banks... Up, Up and away.

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  • Comment Link Reggie Middleton Thursday, 06 May 2010 11:53 posted by Reggie Middleton

    I do give him more respect than most. He's a cool guy, too.

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  • Comment Link Reggie Middleton Thursday, 06 May 2010 11:52 posted by Reggie Middleton

    "But, being an American I respect his right to be a bozo"
    Now, that's funny!!!

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  • Comment Link shaunsnoll Thursday, 06 May 2010 11:49 posted by shaunsnoll

    that is quite the compliment coming from Sprott Reggie, he is without a doubt one of the best around.

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  • Comment Link EQ Thursday, 06 May 2010 11:38 posted by EQ

    Please, that list is the who's who of the status quo. Howard Lindzon and Paul Kedrosky? Is that a joke? Those guys were deer in the headlights before this crisis hits. They don't write about anything requiring intellectual depth. Howard is a huge bozo. But, being an American I respect his right to be a bozo. Is the status quo ever going to give many of us bloggers who called this in substantial detail or continue to be ahead of the curve? Hardly. We aren't part of the club. We don't have the credentials. All we do is beat the status quo senseless.

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  • Comment Link Reggie Middleton Wednesday, 05 May 2010 19:44 posted by Reggie Middleton

    I like where your head is at. It has been my experience that the institutional customers are both more apt to spend money and more loyal than the retail customers - even when it is their own money they are spending. That being the case, there is something to be said for growing organically.

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  • Comment Link Andrew Macpherson Wednesday, 05 May 2010 19:02 posted by Andrew Macpherson

    I still think easy and clean trading strategies based on the wonderful research here would generate a great deal of retail interest, far eclipsing the benefits of finding a VC benefactor.

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