How Big Investors Cash In on ‘Alternative Data’

Corporate filings and government reports still guide how many investors view global economics and politics. But more of them are turning to non-traditional information -- alternative data, in industry parlance -- to supplement official statistics. Torrents of terabytes produced every day by web searches, tweets, credit-card purchases and satellites can be turned into insight on foot traffic at Chipotle, the macroeconomic performance of an African nation -- even who’s arriving in Omaha to potentially pursue deals with Warren Buffett.

A former chief economic adviser to Indian Prime Minister Narendra Modi crunched data such as vehicle sales and electricity consumption to show that the nation had overstated annual growth by about 2 percentage points on average from 2012 to 2017. Researcher and entrepreneur Apurv Jain found clues to where U.S. employment was headed by analyzing 1.2 billion tweets from 230,000 Twitter users who posted about losing or finding a job. The hedge fund Point72 Asset Management shorted Weight Watchers shares after reviews of social media, online search, and credit-card transaction data suggested that competitors were gaining momentum.