More data makes for better decisions, but how do you use it efficiently and not drown under the weight of it… or worse, pay attention to the wrong information. This is why fundamental funds, such as Point 72, Coatue, Citadel, Maverick, and others are spending millions on quants and engineers…….to tame the data, improve efficiency and get a research advantage.
The EDS Analytics Platform achieves the same result, streamlining your process by integrating internal data, financial data & any alternative data, together with your fundamental perspective…….in one dashboard, creating deep insights, in less time.
Let’s look at an example: Limited Brands (LB), has long been a leading retailer, but over the past few years, alternative data, together with a deep fundamental understanding have been key inputs to understanding its stock price.
Figure 1. LB valuation and margins are at multi-year lows, likely meaning the investment community is expecting weak trends to continue. However, we can clearly see sales growth has been moving up…..new ideas pop up every day, where does LB fit within your investment philosophy and priorities?
Figure 2. We start with the EDS dashboard, which ranks and customizes the entire universe according to your unique investment style, helping streamline your process and filter the world down to the stocks you care about – market factors you customize, integration of all of your internal data (mgt confidence, price targets) and external data (alt data, mkt data, etc.). You determine the metrics, factors and how each is weighted.
If the working investment thesis is: Sales are starting to grow again and Margins are stable.
- Before you spend time researching the idea, what is the upside?
- And how can you be as accurate as possible with your forecast?
Today’s “Comp Sheets” are outdated, often relying on excel or GICs classifications….thus, you may NOT be Comparing to the Right Peers (check out this CFA article). At EDS, for Limited Brands, we can customize & compare high margin retailers, with low sales growth across the entire retailing sector in just a few clicks, adding efficiency and better accuracy to your investment process.
Figure 3. Other specialty retailers, with similar margins (16%) and growth (4-5%) are valued much higher, at over 9X EV/EBITDA, providing significant upside to LB if our thesis plays out.
Figure 4. In this test example, we can clearly see that, while overall transactions are down, the price per transaction is up significantly, so their strategy to move customers to higher priced products appears to be working. We can also see that they are attracting more shoppers as well, which could help future sales.
If you are interested in a demo or have any questions please reach out to us at sales@equitydatascience.com.