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Hedge funds see a gold rush in data mining

The increase in the number of job postings on the website, the quality of the employees' ratings on the company's leadership, or the rise and fall of commodity pricing can be an important source of information about the state of a business.

When Under Armour, the sportswear maker brought to prominence in Oliver Stone’s American football epic Any Given Sunday, reported its latest earnings in early August, it was an unpleasant surprise for many investors.

The company reported a second straight quarter of losses, cut its sales outlook for the rest of the year and announced a large restructuring programme that it warned would halve its operating profits in 2017. The shares tumbled almost 9 per cent on the day and have kept sagging since.

But for some hedge funds that were sold bespoke data on the company, the dismal results might not have been such a shock. In recent years there has been a proliferation of new “alternative data vendors” that trawl through vast pools of digital information and sell it to investment groups desperate for an edge in markets.

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