Next Boston QWAFAFEW Meeting:
Tuesday, 19 Jun 2018
Using Brand Loyalty to Extract Alpha From Big Data
A QWAFAFEW discussion led by:
Richard C. Davis
Peter Lynch used consumer focus groups and the concept of “brand loyalty” as a key equity selection criteria while managing the Magellan Fund at Fidelity Investments from 1977 to 1990. During that time the average annual return experienced by Magellan’s shareholders was over 29%.
“Using Brand Loyalty to Extract Alpha From Big Data” will explore ways to adapt Peter’s idea for the 21st Century by leveraging “Big Data” into history’s largest and most timely “brand loyalty” focus group.
Richard C. Davis is the Chairman & CEO of the BrandLoyalties, Inc. BrandLoyalties grew out of Mr. Davis’ frustration with the lack of timeliness and poor quality of information available to investors about the corporate intangible asset “brand loyalty.”
“It became clear to me that nearly all of the data on consumer loyalty was coming from either seriously time-lagged surveys or trade group massaged spin,” he says. “I also knew that hard data was available essentially real-time one the web and in social media that could allow investors to know how loyal consumers are to corporate brand names on a day-to-day basis. The only problem was developing the technologies capable of extracting business intelligence from ‘Big Data’ and delivering it to institutional investors on a daily basis.”
Mr. Davis’ interest in the development of technologies that empower investors started over 30 years ago. One consistent strategy utilized by Mr. Davis during his entire career has been to push the data collection process as far up-stream as possible, developing technologies that capture critical data as close to the original source as conceivable. This has been made even more possible by the rapid evolution of vast amounts of “Big Data” generated – consciously or unconsciously – by billions of people every day as they simply go about their plugged-in life during the 21st century. In 2009 Mr. Davis started the Consumer Metrics Institute, Inc. to acquire and channel industry-specific econometric information to institutional investors in a timely manner.
In 2012 Mr. Davis expanded this vision by launching ticker-specific BrandLoyalties – a unique source of quantitative research that uses “Big Data” derived consumer behavior to generate forward looking daily signals based on shifting consumer loyalty to (and opinions of) the brands of publicly traded equities. The service tracks over 100 million daily online consumer choices and identifies which equities are likely to be impacted (positively or negatively) by changing consumer opinions of those brands – ranking equities every day based on essentially “real time” rates of change in consumer brand loyalty. Signals derived from this analysis are generated well before earnings announcements and generally before guidance is provided – giving clients the ability to identify equities with potential revenue growth at the far end of corporate distribution channels and mitigating risk by monitoring or avoiding stocks which display fading customer loyalty, rapidly changing opinions or unfolding major PR events.
Under Mr. Davis’ direction the Consumer Metrics Institute and BrandLoyalties have focused on turning upstream consumer choices into information that institutional investors can use to make well informed decisions in both actively and passively managed portfolios. “We often know how consumers feel about the products and services of major corporations even before the ‘corporate insiders’ sense those changes at their end of a convoluted distribution channel”, Mr. Davis says.
Mr. Davis graduated from college with a B.S. Cum Laude in Physics. Before founding the Consumer Metrics Institute, he held a number of positions, including founding principal of a NASD broker/dealer and registered investment advisor. But his world is not all data and business intelligence: his enjoyment of classical music led to a 5 year non-profit sabbatical from the investment world to manage the turn-around and resurrection of a financially troubled US orchestra.
Time: 6:15 PM sharpe
3rd Floor of the Tennis & Racquet Club
939 Boylston Street
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Atkinson, NH 03811
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Donna Cool Murphy (Dinners)
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