(Bloomberg) — Acadian Asset Management, the Boston-based quantitative firm that manages $77 billion, struck a deal with Microsoft Corp. to use its Bing Predicts big data technology to inform its investment decisions.
Acadian said it’s the first investment firm to use Bing Predicts, a machine-learning project that mines internet search and social-media data for factors to try to forecast events like a corporation’s quarterly results. The partnership also aims to help Microsoft, which currently produces a monthly estimate of U.S. retail sales, make more economic predictions.
“With Bing search history, we know what consumers are searching for, and how that will relate to the future earnings of companies,” Ryan Stever, director of quantitative global macro research at Acadian, said in an interview. “Anything that can speak to the future earnings growth of a company is going to be valuable to us.”
Money managers are gobbling up big data sets, from satellite images to cell phone tracking, looking for patterns that could provide insights into potential wagers. But finding unique and relevant data sets can be difficult amid the competition from a growing number of investment firms seeking to gain a quantitative edge.
The Emerging Markets Equity strategy, Acadian’s largest at $16.2 billion, rose 29 percent in the year ending Jan. 31, according to the firm’s website. The strategy has gained an average of 6.5 percent per year since its inception in 1994.
Using Internet Data
Bing Predicts started as an experiment by Microsoft to see if it could call the results of shows like “American Idol” and “The Voice” based on internet queries. The technology now has data from millions of daily searches on Bing, the default engine across Yahoo! Inc.’s string of websites and on Apple Inc.’s Siri.
Stever said he meets weekly with a team at Microsoft to help guide research into new data sets and leverage the computer company’s expertise in organizing, compiling and analyzing its data. Acadian aims to combine trading signals from Bing Predicts with its own predictive analysis to determine, for example, whether a company will top quarterly sales expectations.
“When we think about what Bing has to offer, it’s an enormous source of potential in terms of what it can predict in the financial markets,” Stever said.
Acadian relies on computer models to determine how companies should be valued and to exploit inefficiencies in the market. The firm also manages a portion of Microsoft’s balance-sheet assets.
Acadian, founded in 1986, is part of New York–listed OM Asset Management Plc, which is majority owned by London-based Old Mutual.