InvestOrama's video: BILLIONS Teardown S1E2: How AXE Capital could react to the SEC raid

We are getting inspiration from Billions season 1 episode 2 from Showtime, one of my favourite shows about finance, to apply some fintech in the world of hedge funds. Subscribe to get all the updates: http://bit.ly/2FQSunJ More videos from the Fintech in Films series: https://www.youtube.com/playlist?list=PLXTR2SfmGn34U5W_AQ_KB0Humcee3ErHH The team is gathering in the board room at Axe Capital to discuss ideas. Suddenly the SEC busts in and starts grilling the traders about the rationale for their positions. They are all based on tips. Luckily for the Axe Capital team, it was just a drill organised by their super-smart CEO, but they didn't look good. Could Bobby Axelrod's (Damian Lewis) team do something smarter than just using tips and safer than insider trading? Yes, they could with fintech (financial technology) that provides alternative data, such as geospatial imagery for trading. Concepts in alternative investing, fintech and hedge funds explored in this episode: 👉The SEC: US Securities Regulator 👉Event-Driven: hedge fund strategy 👉Global Macro: hedge fund strategy 👉Insider Trading: illegal use of information 👉Alternative Data: using alternative sources outside the company 👉Geospatial Imagery for Trading: "The eye from the sky" obtaining an edge with geospatial data (and legal) ABOUT THE BILLIONS SERIES Emmy® and Golden Globe® winners Paul Giamatti and Damian Lewis star in a complex drama about power politics in the world of New York high finance. Shrewd, savvy U.S. Attorney Chuck Rhoades (Giamatti) and the brilliant, ambitious hedge fund king Bobby "Axe" Axelrod (Lewis) are on an explosive collision course, with each using all of his considerable smarts, power and influence to outmanoeuvre the other. The stakes are in the billions in this timely, provocative series. ABOUT US FintechOrama is about exploring and celebrating the Fintech world in a visual way In Ancient Greek ‘orama’ means ‘sight’ or ‘spectacle’. We plan to make the world of finance a meaningful spectacle by debunking the myths, interviewing the experts, discovering the rising stars, and finding purpose. http://orama.tv Instagram http://instagram.com/fintechorama http://twitter.com/fintechorama https://www.quora.com/profile/George-Aliferis https://medium.com/@orama FULL ANALYSIS Let's start with "We're SEC compliance." Does he say SEC Compliance? Ok the SEC is the US securities regulator, but who is SEC compliance. Looking on the SEC website there is an Office of Compliance Inspections and Examinations, but they are doing examinations, not busting in people’s offices. https://www.sec.gov/ocie Anyway, the SEC would probably not just show up like that but let’s just keep going. They grill each trader about their recent trades. "It was an event-driven strategy" Event-driven is a hedge fund strategy but it doesn't work with "any" event. Something needs to happen at the corporate level, an official announcement, like a spinoff. That should make it easy to check. "Event-Driven Macro" This doesn’t sound quite right for a hedge fund. Event-Driven is a strategy and it is at micro-level (the company) and Macro, usually called global macro because it’s looking at what is happening around the world. So the normal reaction to that answer shoud be... bullshit. It seems like all Axe Capital does is trade on tips, this can be legal but if you’ve watched the series you know that often it’s actually insiders information. But they could do it better than that by using fintech: one of the promising new development is using alternative data. There are many possible sources, such as Web site usage Mobile App or App Store analytics: phone Social media posts One of my favourites is what you can do from images taken from above: satellite or planes or drones or all of them combined For energy trades, Axelrod could use images that scan how filled the tanks are Retail: use satellite imagery of the car parks to get information about how they trade before they report their revenues But don’t worry about the Axe Capital team just yet, it was just a drill!