The world of inside information is under attack again from the FBI and SEC.
I believe they are only about 10 years behind. While they catch a few wrongdoers, the age of ‘social signal’ is upon us. There will be no damning phone calls or paper trails in the new age of inside information. There will be hard work, intuition and the application of ‘social signal’.
In the last week, I have talked to managers of about $10 billion in long/short strategies. They are asking questions about how to use Stocktwits, how to filter etc…. NONE of the managers I talked to are using Bloomberg, a few of course are paying. Few of these managers are using the social web including Linked In, Twitter and Facebook and if they do, it is not to do their ‘work’.
I have seen many start-up companies started to aggregate the messages and figure out sentiment. I have not invested in any. I believe Facebook DOES have a ‘happiness index’, but they can keep it. I want to know if the salesforce at F5 or Atmel is happy. I want to know how miserable the floor employees at Best Buy are and who Microsoft may be buying. Some of this signal is easy to find, some is being caught by the likes of TechCrunch, and the big money will come to those that can pull proprietary signal. At Stocktwits‘, we have our ideas and have been coding and mapping them out. All legal :) .
All this signal is in today’s activity streams and the hedge funds are going to figure this out.
If you hire a head of sales that does not know how to work these streams, you are behind. I know, because Ben is a magician at Stocktwits and I am blown away at the signal he pulls. It is not so much about how good he is at reading it yet (sorry Ben), but how bad those participating are at using it.
It is exciting and interesting to be in the middle of this trend.