As part of our curated Twitter feature in our Equity Data Terminal, we have mountains of data on the most influential finance Twitter accounts. To our surprise, the most influential accounts aren’t professional content creators or major news organizations. Nor are they famous money managers with billions in assets under management.
While many equity analysts currently do not use finance Twitter, the early adopters of finance Twitter likely stand on the vanguard of where news is headed. Firstly, traditional news outlets like newspapers and TV shows must create filler content on a slow news day. Social media is a more flexible channel for receiving news, expanding where there is news (e.g. Trump winning the election) and contracting when there isn’t. Secondly, curation by peers lets the cream rise to the top. Formerly obscure research such as AZ Value’s blog was distributed on finance Twitter well before Valeant issued an 8-k rebutting AZ Value (and before the dramatic fall in Valeant’s share price). That type of niche content is unlikely to appear in more mainstream channels.
As we get ready for 2017 and spending at least the next four years with a Tweeter-in-Chief in the White House moving markets, we often find our client conversations turning towards the effective use of social media in professional investment management. Consider this your cheat sheet.
High Level Takeaways
- FinTwit’s most influential accounts are dominated by equity analysts who put out insightful content in their spare time.
- Second to equity analysts, there are the activist shorts that use Twitter to promote their campaigns. Like it or not, their ability to move markets makes them relevant and difficult to ignore.
- Following the activists shorts, there are niche news accounts (e.g. Activist Shorts, Marketfolly) that mainly aggregate content and curate news specifically for equity analysis. These accounts are far more influential than the official accounts of major news outlets, suggesting that most of finance Twitter prefers the curation of peers and aggregators.
The big picture is that peer-curated news is poised to become a bigger headwind for traditional news. Whereas many newspapers previously enjoyed local monopolies, they now face massive competition in a social media world. This is a world where anybody can create, distribute, and promote their content. There are no barriers to entry anymore. News titans like CNBC and Bloomberg (with their teams of professional journalists) have fewer finTwit follows than a hedge fund manager from Australia who blogs on the side (@John_Hempton). If social media’s popularity grows, the trend will likely continue to erode the returns on capital that traditional media companies have enjoyed.