
Show HN: Stock recommender system using hedge fund data and machine learning - navlio
http://www.navlio.com
======
vonnik
This is a neat idea, but it has a flaw.

The flaw is that Navlio is basing the recommendations on long equity positions
(as well as other securities reported in HFs' 13F filings). But hedge funds
hedge their bets -- hence the name -- by placing more complicated bets than
just buying long, and that includes short sales. You don't have to report
short sales in a 13F.

[https://www.sec.gov/divisions/investment/13ffaq.htm](https://www.sec.gov/divisions/investment/13ffaq.htm)

If you don't know both sides of HFs' bets, you actually have no idea how they
feel about a company. They could have a big long position and a bigger short
that's not reported.

It's central to a hedge fund's business to conceal the kind of bets they are
making, and what they plan to do, until the precise moment that it benefits
them for the rest of the market to pile in.

~~~
navlio
Thanks for this feedback-- It's very accurate that 13Fs do not pick up hedge
fund activity such as short sales and derivatives. 13Fs are not necessarily
comprehensive of all of a single hedge fund's positions as certain funds
sometimes make amendments at a much later date.

Hedge funds, particularly activist funds, do sometimes try to conceal the
stocks they buy - usually by using derivatives which have different disclosure
requirements. However, it is pretty rare for a hedge fund to be long and short
the same stock unless they are doing it for tax reasons - this does not happen
often. Going long a stock to create confusion about a short position (which is
not disclosed) does not happen in the wild.

We believe that "knowing" in the aggregate just the stocks that managers are
long has value. It is noteworthy that equity long/short strategies take a few
quarters to materialize so using quarterly data is still valuable (hence we
have excluded hedge funds that follow a short term statistical arbitrage
strategy with many positions and very high turnover).

~~~
verycurious
Is it possible to have someone from navlio contact me? Is there a contact
email or number for navlio?

~~~
navlio
Apologies - we were having some issues with our email. You can reach us at
NavlioTeam@gmail.com

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inglor
Diclosure: I work at a company
[https://www.tipranks.com](https://www.tipranks.com) and we collect all sorts
of hedge fund, analyst, blogger and insider data.

I don't understand how any of the suggestions it gave me works and that
worries me. It's very discomforting when a site tells you what stocks to pick.

It's important that sites stay technological and give you information rather
than actually promise alpha over the market. I don't think you'd have to be a
genius to know that anyone telling you what to buy (rather than give you
information you can process yourself) and can actually generate you alpha
could just use their money instead of taking yours.

~~~
navlio
Navlio does not use proprietary methods to rate stocks or promise
outperformance. Rather it is a navigation tool to make publicly available
hedge fund data more accessible. Whether you believe that using this subset of
hedge fund data can help you invest better or not is up to you. But at the
least it has the potential to give you a sense of what professionals are doing
in and around the stocks you are looking at.

~~~
encoderer
Or rather, what they _were doing_ months ago and reported on in their most
recent filing.

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hardwaresofton
For anyone who comes into this thread looking for long-term stock advice: put
your money in some ETF (like vanguard) and call it a day. Look at previous
rates of return if you're nervous (though past performance can't predict the
future), and the return on the overall market over the years (it's ~+7%), and
let compound interest do the rest.

~~~
chad_strategic
I used to agree with this strategy before I got an MBA. Then I studied the
markets. Actually the MBA put me at a disadvantage, but regardless. The
markets are so incredible corrupt.

It's nice in theory, however this ETF strategy is extremely overcrowded, hence
the 2008 meltdown. Hence, the August meltdown. Anything that works will
eventually, come to an end... Let's not forget the people that make the
guaranteed money in the ETF are the one's selling you them. (Might want to
check your ETF fees as well)

In the meantime... I created this [http://www.strategic-
options.com/trade/](http://www.strategic-options.com/trade/)

~~~
rc4algorithm
There's so much wrong with this comment...

ETFs are just a way of buying equity, not a market that can be overcrowded.

The 2008 meltdown happened because of subprime mortgages, the approximate
opposite of conservative index fund investments.

ETFs are (in this context) just a convenient way of buying modest amounts of
an index fund.

Index fund companies like Vanguard charge a very low, extremely reasonable
commission for both direct purchases and ETFs.

~~~
hardwaresofton
Was about to say all of the same things... Guess MBA mention was just an
appeal to authority.

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JesperRavn
Before anyone critiques this site, I'd urge them to read the entire front page
of their site. In particular:

 _Tell navlio the companies you like and it will apply machine learning to
match your views with like minded fund managers and predict what else you
might like and dislike._

They are not trying to pick stocks for you that they claim have high alpha,
just use machine learning to match your "style" with money managers
(presumably using data from mandatory reporting by money managers).

Is this going to raise the returns of the average site user? Probably not.
Does it help people to do invest their money according to their own style or
beliefs (wise or otherwise)? Yes, at least according to their claims. Is it a
net gain for society or something that deserves attention? In my opinion, no,
people should stick to the basics (i.e. index funds).

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Everhusk
Cool project, have you tried backtesting your algorithm? You will probably get
quite a bit of negativity if your plan is to make money off this by
recommending stocks as is.

I would suggest trying to backtest with quantopian.com to start. If you are
able to generate alpha (which it will tell you), you could try entering their
monthly contests where they give you $100,000 to play with. Or you could just
go talk to investors, up to you.

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navlio
[http://www.navlio.com/ZKIPL](http://www.navlio.com/ZKIPL)

We ourselves used to track the number of "smart money" investors in biotech
stocks like BLUE (bluebird bio) in Excel spreadsheets. The motivation for
Navlio was to make this easier and more functional. Using BLUE as an example,
the number of "smart money" investors increased from 2 to 10 before its stock
price increased over 6x. We used Navlio to find other stocks like BLUE that
hedge funds were buying and invested in some of those as well. If you want to
actively buy stocks, this is a way to complement your research.

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fuddle
Blindly following hedge fund data is a sure fire way too lose money. A lot of
these hedge funds are using more complicated strategies such as premium
selling and hedging using S&P futures.

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ashwinl
I like its ability to list stock symbols based on themes. As a long term
investor who invests in specific industries, I have established fundamental
and technical criterion I use to evaluate stocks and identify buy/sell times.
But, I'm always on the look out for new stocks. Your "Theme" search is a
useful feature in this regard.

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minimaxir
It should be that financial advice is one of the fields where it's really not
a good idea to "move fast and break things."

~~~
im3w1l
This seems to just be a search tool. It targets people who already know a
little about stocks and funds.

Any suggestion would be researched before being adopted, so I don't think a
failure would be disastrous.

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sytelus
Looks like ETFs like SPY, GLD, OIL etc doesn't work. The interface could be
less jumping from page to page. I would prefer something more simpler and
straight forward:

-Enter few symbols (including ETFs), for which you are interested

-show actual data you have for them (like who bough & sold)

-Show your ML predictions

-Show related stocks/ETF to balance out portfolio

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paradite
On a side note, I think the color scheme is a bit odd and not very comfortable
to the eye.

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Thorman
How do you rank the list of stocks in the "smart money manager" results?
Typically rankings for this type of search are done by percentage of
portfolio, but that definitely does not appear to be the case here.

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fru2013
Nice work! It would be interesting to write a bot that tracks a portfolio
based on the recommendations from this to see how it performs against other
strategies.

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avinassh
If I want to start writing such algorithms, where should I start? No, I am
gonna test with real money and hope to become to rich. I just want to learn
for fun

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tacos
Checking the HN guidelines... hmm. I understand not picking on someone who's
just ported Linux to some micro that absolutely doesn't matter. And I
understand being gentle with someone who's earnestly re-invented the wheel,
badly.

But this is such a horrible idea I think it needs to be shot down and shut
down. And I'm obviously not talking about anything related to the technology
behind the site.

If you think for a half second that millions of dollars of Amazon instances
aren't doing this, for real, and for better... then you shouldn't be in the
market at all.

~~~
alch-
Seriously, did you read the description? It's just an "other people who like
x, also like y" system, which I happen to think is pretty awesome. If anyone
takes this site as investment advice, well, duh, don't. It isn't, and that's
okay.

~~~
tacos
Seriously, have you ever had any recommendation engine produce useful
information? Netflix can't do it for movies, Apple can't do it for Music,
Twitter can't do it for information, and LinkedIn can't do for people or
companies.

Taking this repeatedly-failed concept from consumer nonsense and applying it
to financial products is just idiotic.

Moreover, it's OLD data. It's annoying enough when I buy a four pack of 9V
batteries for my smoke detectors and Amazon tells me that other people bought
C cells and Tickle Me Elmo. Gee thanks!

But this site is the equivalent of buying a winter jacket and having Amazon
tell me that other people are buying swimsuits.

Bad site, bad idea -- and as, usual -- pandering, platitude financial advice
at the top of a HN comments thread in a thread about real issues that affect
real people.

Yahoo Finance had "related companies" 15 years ago and it's equally useful.
Why does this site even exist? To get karma points? To get bought by some
C-list online investment company to help them sell their unethical products?

Real hedge funds (and even casual nerd investors) have stuff that makes this
look like the child's toy that it is. And every financial site has moved into
"managed portfolios" for a reason. Fidelity, Schwab -- even Vanguard.

Or you could use this random blue site and hope their Ruby scripts didn't
choke scraping the SEC website. Your money, your choice I guess.

~~~
dharma1
Youtube's recommendation engine is pretty good

~~~
te
Pandora's is very good

