It’s time to stop calling Derwent Capital “the Twitter hedge fund,” because it’s no longer the only one plumbing social media for investment ideas.
Derwent made a splash earlier this year after pioneering a strategy that involved digging through the 250 million Twitter “tweets” generated each day by users of the popular social media platform in search of clues to the market’s movements.
But now, a handful of other — larger, more established — macro quantitative funds are joining the fray, using Twitter and other portals like Facebook and YouTube to trade tens of billions of dollars with the help of complicated computer models, according to social media aggregator Gnip. Gnip declined to reveal the identities of these secretive funds.
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
The fact that funds are turning to data drawn from social media to help shape their investment process underscores the important role being played by sentiment in driving markets recently, as well as the might of social media network in dictating what users read and how they act. The latest reminder of social media’s power came over the weekend, when a rumor circulating on Twitter sent many Latvians scrambling to yank money out of Swedish banks, triggering a full-on bank run.