I’m pleased to announce the launch of Quandl’s Corporate Aviation Intelligence (CAI) product. This institutional-grade product tracks corporate air travel to yield actionable insights into M&A, corporate expansion, competitive intelligence and other market-moving events.
In late January 2017 Actelion’s stock jumped by more than 20%, taking the market by surprise. Everyone, that is, except for three hedge funds. Och-Ziff, Eton Park and Elliott Management are said to have tracked J&J’s private jet landing near pharmaceutical company Actelion’s Switzerland headquarters in mid-January. Days later J&J announced a $30 billion acquisition of Actelion, resulting in $300M in upside for these three funds.
J&J’s flight data provided leading insights into a critical corporate event and created immense value for shareholders.
With substantial alpha on the table, why isn’t everyone following the lead of these three intrepid hedge funds?
The short answer: Very few firms possess the technological infrastructure and know-how to create a global corporate aviation product suitable for investing. Capturing flight data on a global scale requires extensive resources, including physical hardware installed throughout the world to capture radio spectrum transmissions (with redundancy); as well as the processing power to decode and analyze the data. Having spent over 20 years developing their infrastructure, even the incumbents within this space haven’t been able to establish full global coverage.
Additionally, for the data to be useful to investors, each aircraft must be linked to its corporate owner. This is not as simple as it seems.
Corporate ownership of aircraft is extremely complex and rarely direct. It can take on many different forms, including:
- Aircraft management firms – hiring a company to handle the administration and other rudimentary work involved in owning an aircraft (including signing their name on the ownership paperwork)
- Lease agreements – leasing/using an aircraft owned (and registered) by someone else
- Shell corporations – signing ownership paperwork using a shell company
- Subsidiaries – Registering an aircraft under the name of a subsidiary
- Fractional ownership – a single company owns and registers an aircraft (e.g., NetJets) and then subdivides its ownership to various other companies through a contractual arrangement
Disambiguation can prove insurmountable for many firms, as it requires an in-depth understanding of corporate structure, finance, aviation, technology and data science to discover and maintain an accurate view of aircraft ownership. And even when combined with a global view of corporate air travel, an investor would still require dedicated staff to research and analyze the data, to deliver valuable insights like those for J&J.
To service the need for aviation-based insights, Quandl has launched a new product: Corporate Aviation Intelligence (CAI). CAI was mission-built to provide a unified view of corporate air travel on a global scale. To date, aircraft ownership has been resolved for 1,300 public (ticker-mapped) and 3,300 private companies, covering flights to more than 25,000 destinations worldwide.
Investors can now see in real-time where companies send their private aircraft and identify travel patterns to key locations around the world. With CAI, you can monitor specific companies in your portfolio for flights to uncommonly visited destinations (or to expected destinations), staying abreast of evolving corporate developments. You can even keep watch on airports near a potential acquisition target to see who comes knocking.
Early adopters of this data have been event-driven and long/short funds. For the event-driven set, the ability to anticipate corporate actions is critical. These customers are using the data in two ways: to strengthen investment hypotheses — or to weaken them. They want to see any “unusual” flight and then pull on that thread.
In the traditional long/short space, investors have made use of CAI to hedge against short positions. A shorted stock will still rise upon rumor of an acquisition; CAI helps to position against this risk.
We are truly excited about the potential of this data product, and beta adoption has been swift. We invite you to visit FlightSight, to see examples of corporate events covered by our data.
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