Activism Alarm

Shareholder activism is on the rise and its ever-growing reach greatly impacts the entire equity marketplace. While there may be no real way to curb these investors’ open market activities, innovative models like Q4’s Activism Alarm (AA) are bridging the gap between panicked reactions and strategic proactivity. Understanding activist trading patterns and recognizing when a company is at risk for this type of investor is the key to staying ahead of the game.

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Roughly 20 years ago, there was a paradigm shift in the investment world. A segment of investors, who over time became known as activists, started taking a more aggressive, hands on approach toward the corporations they invested in, looking to influence a company’s direction by exerting their control through ownership.

Shareholder activism continues to be a growing trend, which is why, in 2014, Q4 set out to create a unique and proprietary approach to identifying activist activity in real-time. Q4’s AA uses sophisticated models and historical analysis to create a baseline, or assumptive “normalcy”, for each stock. Through machine learning, algorithms closely monitor equity and options order flow, including liquidity analysis, volume velocity, and trade pattern recognition, to identify when current trading activity veers from pre-set norms.

When these norms are broken in such a way as to match the historical “footprints” left by activist investors, the alarm score begins to spike. These spikes are an indication that an activist investor could be building a significant position in the security. Q4’s AA is a differentiated model for detecting real-time activist movements, helping institution investors track and predict activist investor movements in the open market.

 

Benefits

Q4’s AA, the industry’s first-of-its-kind advanced monitoring system, has given rise to a new area of focus in predictive analytics: activist trading recognition.

Know in Advance

Predict potential activist accumulations and trade before they are made public, potentially getting ahead of outsize gains following the subsequent public announcement. Make more profitable decisions based on complete knowledge of activism.

Data-Driven Results

Proven backtested results showing >42% accuracy in predicting activist trading, increasing the ability to know the likelihood that top activists will be amassing long positions in a given security.

Widespread Coverage

Widespread coverage of close to 4,000 listed North American companies.

Alpha Generation

Leverage Q4’s proprietary methodology to drive alpha generation and manage portfolio risk.

Strategic Positioning

Hedge existing positions, enhance current strategies, or build novel strategies of your own with a complete picture of the activist landscape.

NEW WHITEPAPER

Shareholder activism is a growing trend and top of mind for many capital markets professionals. Our latest whitepaper Activism: how to recognize and predict activist trading outlines Q4’s industry-leading research and how predictive models have come a long way in forecasting activist trading.

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