Q4 Inc. Releases Algorithm to Track and Predict Shareholder Activism

Mar 27, 2017

New whitepaper provides detailed research and backtesting that support high accuracy within innovative activism detection algorithm

Toronto, ON – March 27, 2017 - Q4 released new research on its predictive analytics model to help investor relations professionals and institutional investors predict and recognize activist trading. The research was made public via the Company’s newest whitepaper, “Activism: How to recognize and predict activist trading”, available on the Q4 website. The whitepaper is being published along with the release of Q4’s Activism Alarm (AA) algorithm.

“Shareholder activism is a growing trend, and top of mind for many capital markets professionals,” said Adam Frederick, senior vice-president of intelligence at Q4. “Activist reach has massive impacts on corporate issuers, traders, bankers, consultants, and the equity marketplace. While there may be no real way to curb these investors’ open market activities, Q4’s Activism Alarm gives corporate and institutional market participants the ability to detect and predict activist trading before it is generally known to the public.”

Q4’s scoring system uses sophisticated models and historical analysis to create a baseline, or assumptive “normalcy”, for each stock. Through machine learning, algorithms closely monitor equity and options order flow, including liquidity analysis, volume velocity, and trade pattern recognition, to identify when current trading activity veers from preset norms. When these norms are broken in such a way as to match the historical “footprints” left by activist investors, the alarm score begins to spike. These spikes are an indication that an activist investor could be building a significant position in the security. Q4’s AA is a differentiated model for detecting real-time activist movements, allowing one to stay ahead of tomorrow’s trading activity.

Q4’s AA is rooted in over two decades’ worth of experience from a team of veteran stock surveillance analysts, experts in real-time monitoring, and the tracking of activist shareholders such as Pershing Square, Carl Icahn, and JANA Partners. Q4’s unique expertise in these highly specialized niche markets has given rise to a new area of focus in predictive analytics: activist trading recognition.

The AA is measured on a 0-10 scale, with 10 being most “at risk” for potential activist buying. In those cases when stocks reach a 10, the AA is capable of predicting a more than 45 percent likelihood of an activist increasing their position over the next 90 days. With such a high degree of predictability, the applications of the technology are not only being leveraged by corporate IR teams, C-level executives, and public company boards, but institutional market participants as well. Portfolio managers, quant traders, asset managers, prop desks, bulge bracket banks, block trading desks, and advisors benefit by driving alpha and managing portfolio risk through the utilization of the algorithm. Investors may trade before activist positions are public, potentially getting ahead of outsized gains following the subsequent public announcement.

As a corporate issuer, Q4’s AA affords an IRO, C-level executives, and the board the opportunity to get ahead of activist trading and take the necessary precautions and defensive measures. For bankers, lawyers, and other crisis management consultants, it provides unprecedented foresight and a phenomenal prospecting tool.

Download the whitepaper here.

To learn more and test Q4’s Activism Alarm, email sales@q4inc.com to arrange a demo.

For more information:
Taryn Shulman, Q4 Inc.
Director, Marketing
416-540-9832
taryns@q4inc.com

About Q4 Inc.

Q4 is a global leader in cloud-based investor relations and capital market intelligence solutions. Thousands of brands around the world use Q4 products to better connect with investors, uncover valuable insight into the capital markets, and drive alpha. Q4 has offices in New York, Chicago, Toronto, Copenhagen, and London. Visit www.q4inc.com to learn more.

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