Investing in Credit with Alternative Data

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When I worked at Third Point we invested in all asset classes from public equity, to venture capital investments, credit, structured credit, macro, and even some cryptio. Everyone always assumed we used data and technology to make better investment decisions only for the equity portfolio. In reality, investing in all assets classes using unique data for better insights and alpha is where the focus was. When investing in credit, the approach can be almost identical to equity investing. Take Carnival Cruise for example. The stock has been a long rebound and a favorite short of hedge funds for years. It is both an equity opportunity and a credit opportunity. At the end of the day, the data about how many people are taking cruises, if there are any Covid-related cruise shut downs, how much money is being spent on cruises, how much traffic they have on their website, etc. etc. etc. is relevant for both the equity and debt investors.

The announcement from Similarweb and S&P about them teaming up for a partnership is a no-brainer. Integrate the unique data assets of Similarweb into the credit monitoring and risk assessment tools and analysis that S&P is known for. More on the partnership:

Similarweb has partnered with S&P Global Market Intelligence to enhance credit risk assessments by integrating digital data into traditional financial analyses. This collaboration enables financial institutions to monitor corporate performance more effectively, identify early warning signs of distress, and improve the accuracy of credit evaluations. By incorporating insights such as website traffic and app engagement, the partnership offers a more comprehensive view of a company's health and market presence, addressing the limitations of relying solely on historical financial data.

I’ve always thought Similarweb was undervalued in the public markets. Maybe they are misunderstood, but it’s surprising they haven’t been acquired. On the flip side maybe they go on an acquisition spree gobbling up more unique datasets and we wake up 5 years from now and they are a data & information services behemoth. They are at a unique inflection point and I would love to see them transform themselves into a company the size of S&P or $VRSK

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