Delivering Alpha

These investors are finding 'extraordinarily compelling' opportunities with Big Data

Key Points
  • Big Data is continuing to grow on Wall Street and investors trying to beat the market.
  • Experts see a hybrid worker coming who can combine quantitative and fundamental analysis."
  • An extraordinarily compelling investment opportunity is ahead of us," said Ulrike Hoffmann-Burchardi, Tudor Investment Corp. senior portfolio manager.
Wall Street legends gather at CNBC's Delivering Alpha—Four experts share top investing picks
Wall Street pros gather at CNBC's Delivering Alpha—Four experts' stock picks

Market participants increasingly are using data to generate alpha, opening opportunities both to investors and to Wall Streeters looking to get in on the next big wave.

On the investing side, big data is helping provide insights into consumer behavior that can be used to gauge whether a company is meeting the needs of its sales base or is falling short.

On the employment side, a new type of hybrid worker who knows both quantitative strategy and fundamental analysis using statistics and data gathering will find strong demand heading into the future, according to speakers Thursday at the Delivering Alpha conference, presented by CNBC and Institutional Investor.

"An extraordinarily compelling investment opportunity is ahead of us," said Ulrike Hoffmann-Burchardi, Tudor Investment senior portfolio manager. "I think you'll see in every industry vertical businesses being reinvented around data. That's very interesting. I think even more interesting are the companies which are the tool providers."

(L to R) Dr. Ulrike Hoffmann-Burchardi, Matthew Granade, and Dr. Michael Recce during a panel at the 2019 Delivering Alpha conference in New York on Sept. 19. 2019.
Adam Jeffery | CNBC

The change will result in the rise of "quantamentalists" who combine quantitative and fundamental analysis to harness the explosion of data.

Matthew Granade, Point72 Asset Management's chief market intelligence officer, said the transition is happening as the firm is training analysts with broad skill sets.

""We've backed up where we start hiring people. We start hiring them right out of college, often with STEM degrees, and we teach them the accounting, modeling and things that used to be very differentiating, and now we'd just call them table stakes," he said. "And now we see the differentiated things as related to programming, statistics, data science. But we're creating analysts, and it will be years before they're portfolio managers. But they're going to be that full, complete package like what you're [Ulrike] describing."

Granade has used big-data applications to make money.

He specifically cited shorts the firm took against Weight Watchers and Dave and Buster's that employed data on consumer use and trends that became profitable.

Similarly, Michael Recce, chief data scientist at Neuberger Berman, said the firm used data about how Lululemon's mostly female customer base was expanding to include more men, and how the Starbucks loyalty program was impacting that company.

"The future is going to be this combination of the quantitative processes ... as well as the data sets," Recce said.

—Correction: An earlier version contained an inaccurate quote from Matthew Granade. The story has been updated with the correct information.