The future of finance, inside Peloton's IPO, and CMOs to watch

Shayanne Gal/Business Insider

Alternative data's use is exploding, and so too are worries about a regulatory crackdown

Hello!

Investment firms in recent years have turned to so-called alternative data firms, which turn obscure data sets into tradable information, to try and get an edge on the competition. A cottage industry of tech firms has sprung up, processing information on everything from the weather to web searches and selling it to hedge funds and others.

Now, some are saying there might be a bubble in the industry.

Take Thasos Group. A player in the booming $7 billion alternative-data industry, Thasos was worth $42 million, had ties to MIT, and boasted a blue-chip CEO whose prior company Sense Networks was once named the "The Next Google" by Newsweek. Thasos was also part of Bloomberg's newly launched alternative-data marketplace, meaning it had a stamp of approval from the data juggernaut.

But Thasos struggled to make money selling to its main financial services to clients and, in August, was forced to fire two-thirds of its staff, sources told Business Insider. Its CEO and cofounder, Greg Skibiski, also stepped down.

The problems Thasos faced aren't unique, Bradley Saacks and Dan DeFrancesco report. While there's no shortage of hedge funds interested in buying data, the market is becoming both crowded and commoditized.

"We may have a bit of an alternative-data bubble," Mike Chen, a portfolio manager at PanAgora Asset Management, told Business Insider. "I believe that a lot of the more advanced alternative-data users - advanced hedge funds and investors - are probably experiencing what I might call 'alternative-data fatigue.'"

It's a stark reminder of just how quickly any technical or investing edge will get competed away on Wall Street. Our team had a number of other stories this week focused on the use of technology in finance to get an edge, from using virtual internships to identify tech talent to shrimp-tracking blockchain. Here are some highlights:

• Bradley reported that Nasdaq-owned alt-data seller Quandl just hired BlueMountain's former data buyer to get inside hedge fund clients' heads.
• JPMorgan Chase hires 1,000 entry level employees each year in its tech division. Joe Williams reports it's now using a virtual internship to help pinpoint promising talent to compete against Amazon, Google, and other Silicon Valley giants for workers.
• Goldman Sachs' massive quant business now rivals AQR and Two Sigma. Dakin Campbell talked to the bank's top quant about asset growth, finding data sources, and why critics of computerized trading are wrong.
• Stripe just scored a $35 billion valuation, up $15 billion in just one year. But its president told Matt Weinberger that it's still a "toddler," so don't call it a "late-stage startup."
• Lucia Moses reported that Bloomberg News just announced a slew of changes, showing where the company is placing its bets.
• Shannen Balogh talked to Wells Fargo execs about its blockchain and Plaid data-sharing push. The bank has been balancing new tech investments against spending on cleaning up risk controls.
• Shannen also went to Mastercard's tech showcase, which featured biometric sensors and shrimp-tracking blockchain. It's part of a push to embrace a future without cards.

Shannen and Joe are both recent additions to our BI Prime team. You should also check out coverage from recent new additions like Melia Russell, who covers venture capital and tech and reported on a Google engineering director who is black and said he would be accosted less at work if he dressed like a janitor.

And Patrick Coffee, who joined us to cover the advertising business, this week had the scoop on an internal memo from McDonald's new ad agency which reveals why the world's biggest fast-food chain bucked industry trends to reshape its marketing strategy.

I look forward to showcasing more great stories from new additions to our team in the coming weeks! Enjoy your Sunday!

-- Matt

Finance and Investing

Bank of America's aggressive push into cities like Portland, Nashville, and Denver is helping reclaim ground lost to dealmaking rivals. Now it's eyeing the rest of the US.

To rev up investment banking fees and reclaim market share, Bank of America is chasing smaller deals - and that's taken it to far-flung American locations it had previously ignored.

Private-equity firms are already interviewing 22-year-old bankers who will start in 2 years. Their earliest-ever hiring kickoff shows how crazy the battle for talent has gotten.

Private-equity firms are already interviewing first-year investment-banking analysts to fill 2021 associate positions, marking the earliest-ever kickoff to recruiting for those roles, sources told Business Insider.

JPMorgan is winning the most hedge fund business as Wall Street banks swoop in on Deutsche Bank's $200 billion in prime brokerage assets.

As the debris clears from Deutsche Bank's shocking retreat from equities earlier this summer, JPMorgan is emerging as an early victor.

Tech, Media, Telecoms

Inside the Peloton road-show stop in New York where investors snapped selfies with star instructors and took turns riding the $2,000 bike

A line of suit-wearing money managers snaked outside the ballroom of the Lotte New York Palace Hotel in midtown Manhattan on Thursday, where the buzzy exercise company Peloton was set to pitch its initial public offering. But many weren't there to press Peloton CEO John Foley or CFO Jill Woodworth on financials.

Healthcare, Retail, Transportation

The 20 CMOs to watch in 2019

The $221 billion advertising industry is facing an onslaught of challenges, but a new crop of marketers is rising to the occasion.