Mining Twitter for golden trading opportunities [to be launched in Cayman]
By Paul Hawtin, From Market Watch
Traders and investment managers are showing a growing interest in Twitter as a valuable tool to identify unique trading opportunities.
A few weeks back the Securities and Exchange Commission (SEC) approved the use of Twitter and Facebook for company disclosures, and Bloomberg announced it’s now the first financial information platform to integrate real-time Twitter feeds directly into the investment work flows of market professionals. Read more details from The Tell blog.
The use of Twitter for trading is still a relatively new concept. As one of the original pioneers in the subject, I’m in the process of launching Cayman Atlantic, a boutique investment management firm where I will be executing innovative trading strategies using real-time information derived from multiple sources on both the firm’s own capital as well as my clients.
Initial results are encouraging. I’ve been trading on a simulated account since July 2012 and the return at the end of April 2013 stands at 10.78%.
Twitter provides vast amounts of untapped real-time information. The trick is to use the 200 million active users as your eyes and ears on world events. By carefully listening in to billions of tweets, you can spot situations before the rest of the world can. This allows you to act on the information and position yourself into a trade before the news gains traction to the wider public.
Royal Carribbean and Norovirus
On the March 8, a Royal Caribbean (RCL -1.52%) cruise ship arrived in Florida with 105 passengers on board who were sick with Norovirus. At 1 p.m. that day, the South Florida News Channel WSVN tweeted “Royal Caribbean’s Vision of the Seas cruise ship has pulled into Port Everglades after an outbreak of norovirus on board”.
Now, if you had the technology to detect that tweet the moment it came out you could have speculated and taken a short position on Royal Caribbean Cruises Ltd. As it happens the share price fell 2.9% an hour later after the news went mainstream. Read: 10 things cruise lines won’t tell you.
Fake Associated Press tweet
Another good example of the impact Twitter has on the markets was the hacked Associated Press tweet that read “BREAKING: Two Explosions in the White House and Barack Obama is injured”. This caused the Dow Jones (DJIA -0.98%) to drop 1% on the day. Again, a golden trading opportunity if you’d picked this up in real-time. Read: Twitter trading influence laid bare by fake tweet.
More and more investment managers are joining the gold rush and developing real-time Twitter monitoring systems for their own proprietary analysis. Expect to see this subject grow in popularity over the coming years.
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Cayman Atlantic – Investment Management
We Manage Your Capital
We are a boutique investment management company based in the Cayman Islands. We combine traditional banking values with innovative trading strategies.
We aim to achieve consistent, absolute investment returns on your capital whilst keeping volatility and risk to a minimum.
Our Founder and CEO – Mr Paul Hawtin ACSI
Our Founder and CEO is recognised as one of the world’s most innovative traders. With over ten year’s experience, Hawtin has developed proprietary investment strategies that aim to deliver consistent absolute returns.
Hawtin has a deep understanding of the regulatory requirements and environment for the investment management industry as well as ten years experience trading derivatives in the City of London.
He has achieved the following awards in recent years:
Winner in the Smarta100 2012 awards for Business of the Year.
Finalist within the Entrepreneurship category for the “Square Mile 30 under 30 awards” 2010.
Nominated in the 9th annual Awards for Excellence in Trading & Technology Europe 2011 – Most Innovative Trading Firm.
Relationships
We enjoy building solid relationships with our clients and partners that stand the test of time.
Trust is everything in business.
We focus on transparency, honesty and integrity.
For more go to: http://www.caymanatlantic.com/
Read also:
For The Eternal Optimist File: A New Twitter Fund. And The Cars That Go Boom.
By David Leinweber, Contributor, Forbes
In the past I’ve written about the sorry results from investment strategies driven by Twitter, such as the London based firm , Derwent Capital Management, DCM, that started with with 20 million pounds in 2011, and auctioned of the software and office supplies for $186,000 in February.
Perhaps because of that, I got a friendly email from a gentleman named Paul Hawtin, a founder of the ill-fated London fund, that he has moved to the Cayman Islands, and is starting over. The new fund’s website is here, and an article talking about how they plan on “Mining Twitter for golden trading opportunities” is here.
I signed up for the newsletter. There is definite evidence that Twitter content can SOMETIMES move the market, the most dramatic example being the “hash crash” when some hackers hijacked the Associated Press Twitter account and sent out bogus news about bombs going off at the White House, causing a brief 143 point drop in the market. But this kind of event is no basis for an ongoing strategy. The offending, and utterly illegal tweet is attached. They still had 69 characters left.
Most of what I see on Twitter seems to be pointless babble. There are no stocks, options or futures in Kim Kardashian, though she personally is doing fine with it, getting a reported $20k per product mention. It’s good work, I suppose, if you can get it. However, the SEC recently announced that it was OK for CEOs and other corporate insiders to tweet their innermost musings in an official capacity, so if enough of them do this, there is the possibility of squeezing these missives for explicit and hidden sentiment clues, which it what it sounds like the Cayman Atlantic fund has in mind.
For people lucky enough to have a high profile, and a big chunk of a low priced stock, this can pay even better than a shampoo endorsement from Kim Kardashian. The poster child example of this is the Beats Headphone company, founded in 2008 by former NWA rapper Dr. Dre. Most audio critics called the product an awful sounding piece of $300 bling, the equivalent of ‘the cars that go boom” to wear on your head, if you were a teen with more money than sense.
Dr. Dre never lied about take-overs or financials, he just flogged the product on Twitter, and they flew off the shelves. Enough of them that Taiwanese electronics firm and Apple AAPL -0.31% wanna-be, HTC, bought half the company for over $300 million. That would amount to 15,000 product endorsements for Twitter champ Kim K. Only one every 30 minutes for a year. If anyone can do it, she can.
Boy, sometimes I think I’m in the wrong line of work.
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