While some alternative data providers are jumping in on the meme-stock craze by producing new datasets and analyses geared toward risk management and alpha generation, others—perhaps rightly so—are staying cautious.
As for whether meme stocks are good or bad for hedge funds and for data providers’ businesses, the jury is out—at least in the public eye. But maybe in the data there’s a clearer answer, says Jon Caplis, founder and CEO of PivotalPath, a hedge fund consultancy founded in 2013. It covers 2,300 hedge funds across 40 strategies globally by working exclusively with institutional allocators such as pension funds, endowments, wealth managers, and large family offices. This gives the company insights into the ways in which about $2.5 trillion of hedge fund capital across the globe is used and moved.
PivotalPath recently created its Meme Stock Basket to systematically track hedge fund exposure to this risk factor. The basket includes 15 of the most cited stocks on Reddit, including GameStop; AMC; BlackBerry; Bed, Bath & Beyond; and Nokia. The company then systematically analyzed whether these positions could have further repercussions across the hedge fund industry. In evaluating more than 1,000 institutional-grade hedge funds, it has found that the vast majority of hedge funds are not exposed to this risk factor—meme stocks—in any statistically significant way.
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