As mentioned in my blog post on how to use reverse search, I believe that investors and analysts need to be aware of critical information on the companies and industries they follow, so they can reduce any uncertainty around an investment thesis.
In order to ensure investors stay on top of all this information, AlphaSense includes a simple, yet brilliant ability for users to save their keyword searches and set up email alerts on any companies, products, industries or investment themes they care about. These automated email alerts include text snippets with keywords in context, and users can be notified at a frequency of their choosing.
The 3 Best Things About AlphaSense Alerts
1. Time savings on equity research you already cover.
Analysts who need to comb through every new SEC filing can use AlphaSense to jump directly to relevant sections of a report and ignore unimportant filings. This is especially useful when larger companies file reports that are over 100 pages long and can take hours to go through.
In order to set up alerts, you will need to perform a search that you would like to save. This search can be connected to a single stock, a group of stocks (for example, if you are looking at how competitors are talking about an aspect of their business) or you can save a general search that will allow you to catch any other material relevant to your portfolio.
For this example, I used quotation marks around my keywords, “candied fruit,” to narrow my search results.
Once you have saved a search and set a frequency for your alerts, whenever a new document is available and includes mention of your keywords, you will receive an email alert to help you stay on top of related developments.
I also recommend you set up searches that notify you about any negative developments regarding stocks you cover. These can span from significant searches such as SEC inquiry or adverse audit opinion (which can be seen in the sample searches included with AlphaSense), to more nuanced searches for negative factors such as lower guidance or production issue.
This feature has saved me hours of time, and it’s priceless, because I don’t have to worry about missing important information. I had been using Google Alerts in the past, so I can fully appreciate the quality and precision of AlphaSense, which I believe is unrivaled in this regard.
2. Expansion of your investment universe or coverage.
As shown in the previous example, you can set up searches that span across all of the vast content sets included with AlphaSense, such as SEC filings, broker research, press releases, company presentations, conference call transcripts, news and industry journals. This allows you to set up a search to identify new investment opportunities or companies similar to those you have already researched.
The possibilities are endless, and you can get very creative with the keywords you track. Here are some examples of my saved searches:
- SEC Inquiry – Because I am more orientated to the short-side, my core searches revolve around negative news regarding companies. SEC searches are important, because they allow me to spot stocks with a potential catalyst already built in (if the inquiry produces results, the stock is likely to be impacted). While the presence of the inquiry on its own is nothing that would automatically make the stock an investment opportunity, at the very least it allows me to learn about any new developments.
- Variable Interest Entities (VIEs) – My other favorite searches are connected to company structure and accounting techniques, which can yield interesting companies I hadn’t otherwise considered. For this example, I am using a keyword connected to company structure:
VIEs are closely related to special purposes entities (SPEs), or entities where the company does not hold a majority of voting rights, but does hold a “controlling interest,” and can be used to shield the parent company from financial risk. VIEs are frequently quite complex and point to an unusual company structure, which could lead to a need for more research. You may recognize these terms from Enron1, who used SPEs to hide its debt, or more recently from Valeant2, who potentially used VIEs to alter the “façade” of the company.
- Tender offer – More straightforward opportunities can come from searches connected to corporate actions, which can point to possible arbitrage opportunities. Tender offers by smaller companies can be an example of where investors can stumble upon a mispricing. I also add odd lot to the search, which is a well-known arbitrage strategy3 employed by smaller investors.
Trying to set up alerts on Google or other platforms for these keywords is inefficient due to the significant amount of noise in the search results, especially when using generic keywords.
3. Text analysis.
This benefit is connected to more complex investment strategies. Users can build searches that incorporate their own view on how to track sentiment in the words of management.
Start by searching conference call transcripts that can showcase the negative sentiment around a company without the obvious fundamental hints. Investors or analysts might scrutinize these reports closer and try to put the outcome of the search into a broader context.
The AlphaSense support team is always available to help build out custom searches and help with more complex inquiries.
AlphaSense client satisfaction ratings are off the charts — the highest we’ve ever seen. And, we’ve been in business for 25 years and work with half of the Fortune 500 companies.
Pulling all the benefits together, it’s easy to conclude that the alerts feature in AlphaSense is able to save analysts and investors an immense amount of time, can lead to new investment opportunities and can be used as a possible starting point for complex investment research.
Jan Svenda is an independent equity analyst focused on the U.S. Small / Micro-cap space where he searches for long ideas trading around Net Current Assets Value (NCAV) and for short ideas which showcase a significant potential for aggressive or manipulative accounting. Most of his research can be seen on his Seeking Alpha profile alongside a monthly performance of his ideas.