Overview:
The client is one of the leading investment firms in the U.S. and has investments in private companies, startups, hedge funds, and in stock markets across the globe. The client wanted to an AI-driven solution that can identify high-potential stocks.
Business Challenge:
Identifying stocks or investment opportunities that produce very high returns are extremely critical to their success. With increasing number of investment options (growing number of stock exchanges, growth success of emerging markets, startup innovation creating level playing field across the globe), it is becoming practically difficult to sift through all and find potentially attractive investments. Other challenges include:
- Finding potential in stocks takes enormous amount of time and effort from research analysts
- Highly skilled equity research analysts are difficult to find
- Bringing in consistency in analysis and adherence to quality of research
The research process involves significant effort and takes a few weeks for the analysts. The larger the set of companies they analyze, the more likely the chance that they find stocks with excellent return potential.
Marlabs Solution:
Using mAdvisor, an NLP-based research analytics solution was built that analyzes multitude of data sources (financial reports, databases, emails, PDF reports, external equity analyses, social media, etc.) to determine the likelihood of delivering high returns. The solution is aimed at automating the traditional process of equity research analysis by quickly identify stocks with high probability of excellent returns.
- For any new investment opportunity, the tool will perform a very comprehensive analysis and determine the probability of the stock becoming a winning investment.
- It also provides much deeper analysis on each quantitative and qualitative attribute that might be impacting the overall investment return.
The differentiators for the solutions are:
- Ability to work with diverse set of data (Excel models, report, emails, PDF, databases, etc.)
- Holistic solution to extract patterns and insights using Financial Modeling, Machine Learning, Natural Language Processing, and Web Crawling
- Enhance research analysts’ workflow with quick analysis with estimated probability of any stock to become a winning investment
- Built on a highly customized knowledge corpus that understands and appropriately assesses qualitative attributes from business commentaries
The Impact:
The solution was deployed in a private cloud instance of the investment management firm and the equity research analysts from the firm use the tool to identify a list of potential stocks that are more likely to generate extraordinary returns. The client was able to validate the rigor of research and compliance of assessment with their 6-criteria investment philosophy. They were able to identify instances where their forward projections are significantly over-ambitious or little too aggressive.
- The client was able to consider 4X potential companies for further detailed assessment compared to traditional approach
- The time taken by equity research analysts and the portfolio management teams to build an investment case reduced by over 40%.
