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Financial technology provider youDevise Limited announced today the addition of 43 net new buy and sell side firms for its Trade Idea Monitor in the third quarter, increasing its installed base by 9% from the second quarter, to 546 firms in the UK, North America and Asia Pacific. “The quarter was one of the best ever for new sales, reflecting heightening interest in stock trading ideas that our sell-side participants are marketing to their buy side clients,” said Colin Berthoud, founding partner of youDevise and co-developer of the TIM.
Institutional brokerage firms use the web-based service to generate commissions through the development and distribution of stock trading ideas to hedge and quant funds and long-term asset managers. As opposed to traditional sell-side research, stock trading ideas are time sensitive, client specific long/short recommendations, based on all information likely to affect a stock’s price near term. Buy side firms typically pay for ideas based on performance.
Third quarter new clients included one of the largest investment management firms in the world, based in London, which is establishing quantitative trade idea investment programs using ideas from US and Asian brokers; a well respected independent hedge fund, based in New York, which is creating a fundamental program with ideas from US and UK brokers; and a large trading fund, based in Hong Kong, which began expanding the number of global and regional brokerage firms from which it is buying ideas on Asian-Pacific stocks. Also during the quarter two large global brokerage firms based in the US began rolling out ideas to US based clients.
Mr. Berthoud said growth reflects the emerging popularity of trade idea investing, based on an increasing amount of data demonstrating success through market gyrations. Since mid-2006, when the TIM developed its first customer base in the UK, ideas involving UK stocks have outperformed the FTSE by 30% on an annualized basis. Since late 2007, when the TIM became more widely available in the US, ideas involving US stocks have outperformed the S&P 500 by 29% on an annualized basis. The studies were based on a simple model investing in all ideas in the region, at the closing price, the day after the idea was added to the service.
youDevise also released TIM statistics for September 2009:- On a sequential monthly basis, new ideas increased 5%, to 20,322; total open and closed ideas increased 4%, to 700,572; and total clients increased 3%, to 546, which is also up 33% year over year.
- Net new clients added – 15 – represented the 8th month in a row of double digit additions. Over the last 12 months, the TIM has added 137 net new clients.
- The percentage of long ideas relative to shorts was 66.1%, the highest since December 2007.
The Trade Idea Monitor (The TIM) from youDevise – September 2009 Data
