Funds and ETFs

Top 25 stocks based on social buzz: Index creator

Get the 'BUZZ' on social media

The creator of a new index that tracks stocks based on big data mining of conversations on social media told CNBC the measure has outperformed the and the Nasdaq composite for the past 3½ years or so.

"We were able to back test this to January 2013. Prior to that, there's just not enough conversation online," Buzz Indexes founder Jamie Wise said in a "Squawk Box" interview Thursday.

"We've outperformed the main S&P by about 30 percent; outperformed Nasdaq by 10 percent," he claimed.

The Buzz Social Media Insights Index consists of 25 stocks that rebalance every month, said Wise, who's also CEO of Toronto-based hedge fund Periscope Capital, the parent company of Buzz Indexes.

"We look at what the collective discussion is on all these online social platforms, and try and determine what people are talking about; how are they perceiving their investments and what they're planning to do with their investments," he explained.

The most important parameter for determining whether a stock goes into the index or not is the "depth of the conversation," Wise said.

Natural language processing software and artificial intelligence is used to synthesize the data from social media platforms such as Twitter, Facebook and blogs, to spit out the 25 stocks with the "best bullish perceptions."

"What we're looking for is longer-term trends," Wise said. "It's not minute-by-minute [or] day-by-day. We're trying to look at it over weeks or months."

The index is being licensed to Sprott Asset Management and ALPS Advisors to deliver the Sprott Buzz Social Media Insights ETF.

The following 25 stocks make up the ETF as of April 14, 2016.

BUZZ ETF Components (as of April 14)

Alphabet Celgene
Apple Intel
Alcoa Twitter
Walt Disney J&J
Gilead Sciences AT&T
Abbvie Jetblue
Opko Health Nike
Tesla Motors Altria Group
Kinder Morgan Biogen
Ford Motor Visa
Sirius XM Holdings Yahoo
Facebook Freeport-McMoRaN
Valeant Pharmaceuticals

— CNBC's Courtenay Brown contributed to this report.