The much-lauded Twitter-based hedge fund by Derwent Capital Markets only traded for a single month before the company shut down all tweet-based operations – but they’re not done with Twitter yet.
Derwent raised £25 million from investors interested in seeing whether sentiment analysis on Twitter could beat the stock market. And after a year of false starts and anticipation, the fund launched in the summer of 2011… but only traded for a month.
The fund did, however, beat the Dow average and the average of other hedge funds, to bring in about a 2 percent return.
It worked by mining tweets for sentiment – or people’s feelings – about certain stocks and trends, based on research that suggested that the aggregate emotions in tweets closely tracked the Dow Jones Index.
Since the firm shut the doors on its Twitter hedge fund over the summer, Derwent has been hard at work making sure this research isn’t wasted.
New Scientist reports that the investment firm will be launching a new platform this summer to harness the power of tweet for their clients. It’s based off of the sentiment research, and offers investors a glimpse into the “sentiment rating” in real-time of any stock or currency, allowing them to trade instantly based on that information.
Derwent Capital founder Paul Hawtin explains:
“It means that people will be able to monitor global stock sentiment for the first time and use the information to influence their own personal investment decisions. I guess in the same way that GPS was developed by the military and then years later we all had TomToms in our cars.”
There is no charge for using the software, but investors must set up a trading account with the firm in order to access it.
(Stock market image via Shutterstock)