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Uncovering Disruptive Forces to Stocks using NLP

Highlighting the power of natural language processing

10 min read
6 Sep 2021

This research note is a guest post from Wachi Bandara, PhD, Chief Investment Officer, and, Rodolfo Martell, PhD, Head of Portfolio Strategy, of Pluribus Labs LLC, a San Francisco-based systematic active equity manager.

SUMMARY

  • Traditional equity factors are not useful for identifying disruption in public equities
  • Natural language processing (NLP) can be applied to uncovering the forces of disruption
  • Especially when applied to unstructured data from private markets

INTRODUCTION

Every investor has wished at some point, whether they admit to it or not, to have access to a crystal ball that could foresee the future. For all Tolkien fans out there, a palantír. For all Marvel fans, the Eye of Agamotto.

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