Even before the hip teenagers realized that nobody goes to the mall anymore, about a dozen math and science Ph.Ds packed into a co-working office in downtown Manhattan already knew it. On their computers, the Ph.Ds started to see a decline in the number of “pings” from cellphones that they were tracking in those malls. And that drop-off became an important signal for the stock market well before some malls announced disappointing financial results.
In a similar way, web-scraping company Thinknum in June noticed a drop in job listings on a Tesla site the day before the company announced a restructuring. And long before it became clear that Adidas was stealing market share from Nike and Under Armour , consumers who filled out online surveys created for investment bank Cowen & Co. started to say they preferred Adidas.
For savvy investors, such information presented buying and selling opportunities.
Gathering data today doesn’t involve driving to every cellphone store in a state to ask how business is doing. Mundane activities—surfing the web, buying something with a credit card—now leave terabytes’ worth of digital clues. Much of it is considered “waste” or “exhaust”—information that’s created in the normal course of doing another kind of business. The people who make the weather or map apps on your phone track your location so they can give you accurate information about the weather. It just so happens that they can also sell that information to hedge funds, which use it to determine where people are shopping. There are hundreds of such apps that track locations with the permission of the people who download them.
Other companies then turn that raw data into useful forms. New York–based Thasos Group gathers anonymized location data from about 500 million phones that are running any one of more than 1,000 apps. The information comes into the company’s computers as dots on a map, as in the case of the shopping malls. The firm’s software links the signal counts associated with those mapped malls to the tickers of retailers or publicly traded mall owners, to see where traffic is growing or shrinking over time.
Thasos allows investors to see which mall customers are from wealthier census blocks, and which shop at multiple malls, among other insights. Bond investors can search by individual mall properties to determine if they’re likely to stay creditworthy.
It’s an incredibly laborious process, one that took Thasos six years to nail down. “It’s like understanding particle behavior and trying to build a model,” says Thasos CEO Greg Skibiski. “It’s physics basically that we do here.”
The company sells the full package of the product directly to investors for $100,000 to $200,000, and Bloomberg is offering a version of it directly through its terminal.
In July 2017, Thasos issued a press release showing foot-traffic data for the five top-performing and five bottom-performing real estate investment trust among the 30 largest ones that the company was tracking. The company’s predictions weren’t perfect—it said Simon Property Group (SPG) was lagging behind, but that company ended up increasing its earnings guidance—but the malls it said were winners all had positive price moves after reporting earnings, and three of the five companies it said would lag behind fell after reporting earnings. Several mall operators are themselves now buying data from Thasos, the company says.
Thasos has dozens of clients, but it’s still relatively rare for most fund managers to pay for cellphone-location information, says Richard Johnson, an analyst with Greenwich Associates. About 10% of the money managers Greenwich surveyed used it.
“The location data gets a lot of headlines, but it doesn’t seem to get a lot of usage,” he says. That’s not necessarily a bad thing, he adds. “The ones people aren’t using now may have the most value,” he says.
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