Having a digital presence has become intrinsically important for the majority of companies and a variety of insights can be gleaned from the web traffic data their websites generate; insights which can help inform hedge fund managers’ investment decisions and support their efforts to enhance communication and transparency with their investors.
By Ed Laverey, Director of the Investors Solution – Having a digital presence has become intrinsically important for the majority of companies and a variety of insights can be gleaned from the web traffic data their websites generate; insights which can help inform hedge fund managers’ investment decisions and support their efforts to enhance communication and transparency with their investors.
“Businesses have become dependent on their digital performance to support growth. Best Buy is one of the best examples of this,” Ed Lavery, Director of Investor Intelligence, Similarweb points out, “The company’s share price growth is dependent on the successful acceleration and scalability of its ecommerce initiatives.”
The necessity of having an online platform was propelled into sharper relief in the wake of the Covid-19 pandemic in 2020 as virtual interactions became part of everyday life. “The pandemic accelerated the digital transformation plans of many companies, and web traffic is a very insightful means of comprehensively tracking many of these firms, their brands and products,” Lavery highlights.
Similarweb provides near real-time web traffic and engagement data. The firm’s online traffic data delivers an unbiased, objective view of real-world web and app performance. This information allows hedge fund managers to get a read on companies intra-quarter, ahead of scheduled reporting.
“Hedge funds can use web traffic and other metrics as a proxy for earnings and compare a company’s earnings in a chosen period, even halfway through a quarter. This means they can get a strong view on that company and how it’s performing, ahead of the official earnings release,” explains Lavery.
Using this alternative data set enables managers to make better informed investment decisions. According to Lavery: “It’s about being prepared and aware of your holdings’ performance. Managers can closely monitor their investments and build an intra-quarter view on a company or segment that’s currently trending. Also, knowing whether a company is not going to hit its target one quarter can help ease some of the issues taking place in that market well in advance of quarterly results.”
Another unique aspect of website traffic data is that it is global. This data is available for virtually any country or regional breakdown.
It can also be used to monitor the number of transactions happening in a particular market or related to a specific brand. “Website traffic is actually a much cheaper substitute, allowing managers to gather transaction information. While credit card data is not really international, website traffic data is,” says Lavery.
Knowing where to start
Managers looking to make use of alternative data could risk being overwhelmed. However, in Lavery’s experience, the most significant challenge hedge fund clients tend to struggle with is related to where to start analyzing a company’s digital presence. “Every digital business operates differently and their websites have different structures and functions – some are transactional, others enable access to tools or services. So, understanding how the website serves that particular company is critical to gaining the correct insight from web traffic data,” explained Lavery.
The service offered by Similarweb, which gives managers access to web traffic data, is intuitive and straightforward to use. “You don’t need to be a data scientist to benefit from the web traffic data we provide. We provide a lot of insight support and share many examples of how the data can be used. We update clients on trends we identify in the market ourselves and show them how they can extract similar insights.
“The most valuable aspect of these digital signals is that any one can find insights on our platform in a way which is simple to use and very visual. One challenge finance and hedge fund professionals sometimes face is looking at a business outside the parameters of financial fundamentals. So, a tool like this can help them extract insight from a different source of information, understand how to prioritise what’s valuable, and what is noise.”
Ahead of earnings season, here are the top 10 metrics hedge fund managers can track using Similarweb data: Transactions, Cancellations, Product performance, Market share and CPG performance. To learn more about Similarweb visit www.similarweb.com/corp/investors/
Ed Lavery, Director of the Investors Solution
Ed heads SimilarWeb’s Global Investor Solutions business. Ed joined SimilarWeb four years ago and has been spearheading the solution to help investors integrate Digital Alternative Data into their investment research. He has also worked with many of the world’s leading brands, shaping their digital strategies through market intelligence data. Prior to SimilarWeb, Ed started his career in Investment Banking in London, working at Rothschild and DC Advisory.
