Monthly Archives: June 2018

Wall Street Tech Spree: With Kensho Acquisition S&P Global Makes Largest A.I. Deal In History

&l;p&g;&l;img class=&q;size-full wp-image-13711&q; src=&q;; alt=&q;&q; data-height=&q;455&q; data-width=&q;650&q;&g; Kensho Technologies CEO Daniel Nadler

&l;strong&g;By&a;nbsp;Steven Bertoni and Antoine Gara&l;/strong&g;

Daniel Nadler, the CEO and founder of artificial intelligence start-up Kensho, kicks off a pair of Ugg boots and sits cross legged on a chair in his boardroom on the 46th floor of New York&a;rsquo;s One World Trade Center as a powerful nor&a;rsquo;easter rages outside.

The scene, like the name Kensho (to see nature) is intentionally Zen: Nadler wears prayer beads on each wrist, drinks green tea from a cast iron Japanese pot and eats oranges, precisely sliced, from black earthenware bowl. There is a Buddha on one wall. Yet, all this meditative calm betrays the frantic pace in which Nadler has grown and evolved the tech start-up.

Nadler launched Kensho five years ago out of the kitchenette of venture firm, General Catalyst, in Cambridge while simultaneously finishing a mathematics PhD. at Harvard. Fast forward to today and Nadler is selling the company (now 120 plus employees strong and profitable) to S&a;amp;P Global for $550 million–the largest price on an A.I. company to date. Despite the sale, Kensho will remain a stand alone brand, with Nadler remaining at the helm.

That the biggest A.I. deal comes out of Wall Street (from a 158-year&a;nbsp;institution no less) and not Silicon Valley, shows just how much the future of finance might rely on bots over brokers. S&a;amp;P is the world&s;s biggest ratings agency, tracing back to the analysis of railroad bonds prior to the Civil War. Its obsession with statistics in finance&a;nbsp;led to the S&a;amp;P 500 Index decades ago. Some $12 trillion in assets are now benchmarked&a;nbsp;to S&a;amp;P&s;s indices; its data covers 99% of company values globally. Now, A.I. is the new frontier in financial information and to own Kensho, a first mover in plying machine learning techniques to financial questions, S&a;amp;P is paying&a;nbsp;a big pricetag. At $550 million, the deal is larger than&a;nbsp;Google&s;s reported purchase of DeepMind Technologies, Intel&s;s acquisition of Nervana Systems, in addition to A.I. buys from Apple and Twitter.

Nadler&a;rsquo;s initial plan for Kensho: Use machine learning to make complex financial analysis as easy as a search on Google. With his cofounder Peter Kruskall, he built an algorithm dubbed Warren (after &l;a href=&s;;&g;Warren Buffett&l;/a&g;) that could pour through millions of market data points to find correlations and arbitrage opportunities. The tech was complicated, but the interface was simple–a text box that let users ask complex questions in plain English. As FORBES &l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;wrote&l;/a&g; in May 2014, &a;ldquo;Out of the box Warren can find answers to more than 65 million question combinations in an instant by scanning more than 90,000 actions such as drug approvals, economic reports, monetary policy changes, and political events and their impact on nearly every financial asset on the planet.&a;rdquo;

With the aim of selling the powerful analytical tool to Wall Street traders, Kensho raised $10 million from General Catalyst, Accel Partners, Breyer Capital, NEA, Google Ventures and others in 2013. A partnership with Goldman Sachs soon followed. Despite the blue-chip pedigree of his backers, Nadler faced daunting obstacles.


Wall Street was tough to break into (no highly paid CTO would opt to have his or her expensive proprietary tech systems ripped and replaced by a start-up). And Kensho&s;s mission to democratize quantitative analysis went against a culture that valued secrecy and exclusivity. Says Nadler, &q;To be totally blunt, I thought the company was going to fail.&q; As he pitched Kensho&s;s innovative technology, &q;There were probably a hundred &s;no&s;s&s; in the first 18-months.&q;

A big break came in the summer of 2014 when Nadler found an advocate in Martin Chavez, then the chief information officer of Goldman Sachs. Chavez led a change in mindset at the blue chip investment bank. In order to maximize efficiency and value for clients, Goldman didn&s;t need to build or own all of its technology. It could partner with nimble upstarts like Kensho to accomplish a big breakthrough for traders and clients alike – and with less risk and cost.

According to Nadler, Chavez&s;s attitude was, &q;I don&s;t care if it&s;s built here, I don&s;t care if it&s;s bought, or I don&s;t care if it&s;s rented. The primary objective is leveraging new technology towards increased efficiency and increased operating leverage.&q; Over a number of months Chavez and his team&a;nbsp;worked to refine Kensho&s;s technology for Goldman&s;s traders. By Thanksgiving, &l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;Goldman became&a;nbsp;its largest investor by participating in a $15 million funding round&l;/a&g;. Other megabanks soon followed: JPMorgan, BofA and Morgan Stanley. A year ago, S&a;amp;P Global led a final funding round at a valuation over $500 million.

&q;Daniel Nadler was prescient in seeing that A.I. — specifically the application of machine learning to large, newly available financial data sets — could yield amazing insights for investors&q;, says Larry Bohn, managing director, General Catalyst, which hatched Kensho in its Cambridge, MA offices. &q;Prior to this, only analysts at quant funds could keep pace with the velocity of information and the custom programming required to achieve significant market insights. Basically, he helped democratize the approach through a hugely innovative software platform and made it available to banks and the broader market.&q;

Forbes has been following Kensho&s;s &l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;A.I. for investors&l;/a&g; for years. Initially, we dubbed Kensho as &l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;Google style search for stockpicking&l;/a&g;&a;nbsp;in our May 2014 magazine issue. Since the inception of our annual &l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;Fintech 50 list&l;/a&g;, Kensho has been a stalwart&a;nbsp;at the forefront of using machine learning techniques to supplement investment analysis. And when big market gyrations have occurred, Kensho&s;s instant analysis has proven illuminating.

Take&a;nbsp;Brexit, Kensho&s;s data archive produced actionable context to the surprise&a;nbsp;populist vote in seconds. It predicted any&a;nbsp;short-term recovery in the British Pound would be illusory because history shows&a;nbsp;populist votes lead to extended local currency selloffs. That&s;s exactly what happened in the days and months after Brexit. The pound plunged to three-decade lows in July, sinking to $1.28 versus the dollar, before rallying slightly to $1.33. The currency then continued its plunge to&a;nbsp;as low as $1.22.

&l;span&g;When populism crossed the Atlantic to the U.S., Kensho again offered compelling insight. After 3% post-election rally in the U.S. dollar history showed a selloff was in store. In early 2017 Kensho predicted that companies hit early by dollar rally – tech stocks — would soon outperform. And that&s;s what happened, it turns out&a;nbsp;tech was the big winner of 2017 and no surprise the U.S. dollar was a big loser.&l;/span&g;

&l;img class=&q;size-large wp-image-13707&q; src=&q;×806.jpg?width=960&q; alt=&q;&q; data-height=&q;806&q; data-width=&q;1200&q;&g; Kensho&s;s A.I. signaled the post election U.S. dollar rally would revert and IT stocks were set to rally.

What is Kensho now saying about President Trump&s;s decision to implement tariffs to steel and aluminum imports?

Don&s;t expect outperformance from the Russell 2000 Index despite some commentators&s; belief that domestic small caps should win in a protectionist environment. In fact, it is the Nasdaq, filled with global tech conglomerates, which traditionally outperforms in the three-months after a major protectionist move. Kensho found this in seconds by studying 14 tariff announcements since 1988.

&l;img class=&q;size-full wp-image-13706&q; src=&q;; alt=&q;&q; data-height=&q;775&q; data-width=&q;1126&q;&g; Kensho finds tariffs don&s;t help small caps. The Nasdaq rallies

Over time, Kensho&s;s relationship with Goldman proved to be more than just a door opener on Wall Street. Chavez and the firm&s;s Principal Strategic Investments team helped&a;nbsp;&l;span&g;Nadler impart a&a;nbsp;&l;/span&g;&l;span&g;big&a;nbsp;&l;/span&g;&l;span&g;pivot at the company — instead of focusing solely on trading (a high-profile yet relatively small piece of big banks) he turned his natural language algorithms to the entire firm.&a;nbsp;&l;/span&g;

Kensho&s;s technology is now used in Goldman&s;s $1.5 trillion asset management division, where a custom built &q;cross correlation engine&q; tracks investors&s; correlations between various assets. Kensho now also spits out a Sunday night report called the &q;Kensho Weekly,&q; which offers A.I. driven contextual analysis of news flow, earning reports and analyst ratings changes. The open architecture of Kensho allows users to tweak variables as they like.

&q;What made Kensho very well received by the Goldman Sachs population was it made the user more powerful; it never disrupted the underlying business model,&a;rdquo; says Rana Yared, a Goldman managing director who oversaw the Kensho investment. &a;ldquo;Goldman Sachs professionals still have to come up with our own analysis, it just makes us more powerful.&a;rdquo; Adds Nadler, &q;&l;span&g;Artificial intelligence is a misnomer. It&s;s accelerated intelligence… It&s;s about doing very human things, which historically you thought were impossible for a human being to do, at a blinding speed.&q;&l;/span&g;

Chavez, now Goldman&s;s chief financial officer, further recommended Nadler expand the platform well beyond investing and trading. After all, Goldman&s;s bankers could use Kensho&s;s big historical database of information and machine learning capabilities to research companies under their coverage far quicker. So too could its corporate clients. That&s;s the key to Tuesday&s;s deal with S&a;amp;P.

With the sale to S&a;amp;P, Kensho&s;s technology will integrate with one the biggest data cogs on Wall Street, used by all of America&s;s biggest companies. Soon its A.I. may be ubiquitous for bond analysts and corporate finance departments alike, not to mention a far broader swath of the investing public.

&q;In just a short amount of time, Kensho&s;s intuitive platforms, sophisticated algorithms, and machine learning capabilities have established a wide following throughout Wall Street and the technology world,&q; Douglas Peterson, CEO of S&a;amp;P Global said in a startement. &q;Via this acquisition, S&a;amp;P Global is demonstrating a strong commitment to not just participating in the fintech evolution, but leading it.&q;

For Kensho, the deal with S&a;amp;P is structured in a way that Nadler believes will help accelerate growth. Kensho will remain a distinct entity, its brainy headquarters will remain in Cambridge, and it is retaining its Buddhist-inspired name. But the scale of S&a;amp;P&s;s relationships and its sale force can now push Kensho&s;s technology to a whole new group of users without big cost.

And by teaming with S&a;amp;P –one of the big financial data organizations– Kensho&s;s A.I. gets a whole new repository of information to parse over. Says Nadler, &q;We now have an incredible moat because overnight we have the global scale with every financial user in the world, and our system becomes exponentially smarter as a result.&q;

&l;em&g;For more:&l;/em&g;

&l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;The Forbes Fintech 50&l;/a&g;

&l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;Inside The Future Of Wall Street And Big Data&l;/a&g;

&l;a href=&q;; target=&q;_blank&q; rel=&q;noopener noreferrer&q;&g;Forbes&s; First Profile Of Daniel Nadler And Kensho&l;/a&g;&l;/p&g;

What is GDPR? Everything you need to know about Europe’s new data law

A revolution in how companies handle your personal information is happening.

The General Data Protection Regulation (GDPR) comes into effect across the European Union on May 25, introducing much tougher rules on data privacy.

Here is what you need to know:

What is it?

GDPR is the European Union’s new data privacy law.

It gives people more control over their personal data and forces companies to make sure the way they collect, process and store data is safe.

The EU hopes to achieve a fundamental change in the way companies think about data — its central idea is “privacy by default.”

Who is affected?

Any organization that holds or uses data on people inside the European Union is subject to the new rules, regardless of where is it based.

Companies may not have any direct relationship with Europe and still be subject to the new laws — for example if they support businesses that have customers inside the EU.

A call center handling customer services for companies that sell products in Europe or a website tracking browsing histories will be impacted.

The cost of complying with the regulation is huge. The International Association of Privacy Professionals and EY estimated that Fortune Global 500 companies spent roughly $7.8 billion to prepare for the new rules.

What do I have to do?

Deal with those emails flooding your inbox. Many companies will have reached out to customers by Friday, asking for consent to keep your personal details.

Scores of firms, including Google (GOOGL), Facebook (FB) and Twitter (TWTR), have also changed their privacy settings in recent weeks in preparation for the new rules. WhatsApp has changed its minimum user age in Europe to 16 from 13.

You will need to agree to the new policies and confirm your age to continue using many services. Children under 16 will need parental consent in most European countries.

Can companies still collect data?

Yes. But only if they can prove that they have a “lawful basis” for doing so.

That could be because they have a contract or legal obligation that allows them to do that.

They can also simply obtain an individual’s consent in order to store and process personal data. Such requests must be clear and written in plain language — no more hiding of consents in general terms and conditions.

They could also be processing data to perform tasks that are in the public interest — such as the police collecting information about suspected criminals.

Or they might need to collect personal data to protect someone’s life. For example, a hospital will be able to access the personal details of an unconscious patient with life-threatening injuries without having to ask for consent.

These companies are getting killed by GDPR

What do companies have to do?

Businesses will have to pay a lot more attention to the security of personal data, and they won’t be allowed to hold onto it for longer than is necessary.

Anyone can ask for their personal information to be deleted from a company’s servers. There are only a few exceptions — for example, for law enforcement purposes or if the service the customer wants cannot be provided without the data.

Business will also be required to tell authorities about any data security breach within 72 hours of discovering it — a rule that should eliminate big gaps between the business finding out and customers being informed.

They may also have to prove they are handling data correctly. This might mean increased monitoring and documentation. Some may have to hire data protection officers.

Why is all this happening?

GDPR seeks to expand and update rules that have been in place since 1995, and unify a patchwork of different laws into one piece of legislation.

The European Union said the new rules are necessary to protect consumers in an era of huge cyberattacks and data leaks.

What if companies fail to comply?

They face big financial penalties.

European regulators can fine companies up to 4% of annual global sales, which for the big tech firms could run into billions of dollars. Penalties for smaller firms would be capped at 20 million ($23.5 million).

ExxonMobil: The Energy Sector’s Biggest Problem?

Yesterday, ExxonMobil (XOM) reported earnings that didn’t do much to excite investors, and today its shares are falling again, making my bearish call from Jan. 14 look better and better. Strategas Research Partners’ Chris Verrone and team note that Exxon–the largest stock in the Energy Select Sector SPDR ETF (XLE) with a 16% weighting–continues to weigh on the energy sector:

Strategas Research Partners

Credit Suisse analystEdward Westlake and team hope for improved financial disclosure from Exxon:

It continues to be a source of annoyance to investors that some US majors do not include a full cashflow statement in their release. The European Majors do so. Deferred taxes have been a drag on cashflow in 2016 across the group. Exxon’s 4Q16 cashflow was $7.4bn and this was depressed by $2.4bn of “working capital/other”. This was likely deferred tax losses. We will only know when we get the 10-K. Even in the 10-Q at 3Q16,Exxon lumped 19% of cashflow into “all other items” disclosure should be more granular. Brent was $50/bbl in 4Q16. AsExxon get the benefit of slightly higher commodity prices, then deferred taxes could become a neutral and then a positive. There is a tail wind from legacy project startups, and shale growth. However, it makes a big difference to Exxon’s oil price breakeven to annualize $7.4bn of 4Q cashflow ($29.6bn) or $9.8bn ($39.2bn) when the cash dividend is $12.5bn and headline 2017 capex is $22bn. On the reinvestment side of the ledger, the recently acquired shale assets could grow to 350kbd over time.Exxon produced 4.1MBD in 2016 with a 3% mitigated base decline. Hence, this shale growth could help offset 3years of decline. Aside from shale,Exxon also has lower cost resources to develop e.g. in Guyana, Papua New Guinea, Aspen solvent-assisted SAGD in-situ oilsands (subject to BAT), Romania, and has downstream.

Shares of ExxonMobil have dropped 0.9% to $83.14 at 10:14 a.m. today, while the Energy Select Sector SPDR ETF is off 0.6% at $72.48.



Galicia Financial Group (GGAL) Stock Price Up -0.1%

Shares of Galicia Financial Group (NASDAQ:GGAL) rose 0.1% on Monday . The stock traded as high as $50.99 and last traded at $50.30. Approximately 20,114 shares traded hands during mid-day trading, a decline of 98% from the average daily volume of 844,765 shares. The stock had previously closed at $50.35.

GGAL has been the subject of several research analyst reports. Zacks Investment Research upgraded shares of Galicia Financial Group from a “sell” rating to a “hold” rating in a research note on Friday, February 16th. UBS Group upgraded shares of Galicia Financial Group from a “hold” rating to a “buy” rating in a research note on Friday, May 25th. ValuEngine lowered shares of Galicia Financial Group from a “strong-buy” rating to a “buy” rating in a research note on Wednesday, May 2nd. Finally, BidaskClub lowered shares of Galicia Financial Group from a “sell” rating to a “strong sell” rating in a research note on Saturday, May 26th. Two analysts have rated the stock with a sell rating, three have given a hold rating and three have issued a buy rating to the company. The company has an average rating of “Hold” and an average target price of $87.00.

Hedge funds and other institutional investors have recently bought and sold shares of the stock. Earnest Partners LLC acquired a new stake in Galicia Financial Group in the 4th quarter valued at $198,000. Envestnet Asset Management Inc. grew its position in Galicia Financial Group by 69.6% in the 4th quarter. Envestnet Asset Management Inc. now owns 3,030 shares of the bank’s stock valued at $199,000 after purchasing an additional 1,243 shares during the period. Quantitative Systematic Strategies LLC acquired a new stake in Galicia Financial Group in the 1st quarter valued at $207,000. Verition Fund Management LLC acquired a new stake in Galicia Financial Group in the 1st quarter valued at $216,000. Finally, Victory Capital Management Inc. grew its position in Galicia Financial Group by 60.9% in the 4th quarter. Victory Capital Management Inc. now owns 3,341 shares of the bank’s stock valued at $220,000 after purchasing an additional 1,265 shares during the period. 31.15% of the stock is owned by institutional investors and hedge funds.

Galicia Financial Group Company Profile

Grupo Financiero Galicia SA is a holding company, which engages in banking, insurance, and the issuance of certificates of deposit through its subsidiaries. Its other activities include intercompany e-commerce, custody services, securities-related representations, mandates, and commissions. The company was founded on September 14, 1999 and is headquartered in Buenos Aires, Argentina.

Stevens Capital Management LP Invests $615,000 in STORE Capital (STOR)

Stevens Capital Management LP bought a new position in shares of STORE Capital (NYSE:STOR) during the 1st quarter, according to its most recent 13F filing with the SEC. The fund bought 24,795 shares of the real estate investment trust’s stock, valued at approximately $615,000.

Several other hedge funds and other institutional investors also recently modified their holdings of STOR. Schwab Charles Investment Management Inc. raised its stake in shares of STORE Capital by 10.3% during the 1st quarter. Schwab Charles Investment Management Inc. now owns 945,430 shares of the real estate investment trust’s stock worth $23,466,000 after buying an additional 88,546 shares during the last quarter. Eaton Vance Management raised its stake in shares of STORE Capital by 4.2% during the 1st quarter. Eaton Vance Management now owns 283,156 shares of the real estate investment trust’s stock worth $7,028,000 after buying an additional 11,460 shares during the last quarter. M&T Bank Corp raised its stake in shares of STORE Capital by 11.9% during the 1st quarter. M&T Bank Corp now owns 19,533 shares of the real estate investment trust’s stock worth $484,000 after buying an additional 2,076 shares during the last quarter. Swiss National Bank raised its stake in shares of STORE Capital by 2.2% during the 1st quarter. Swiss National Bank now owns 297,740 shares of the real estate investment trust’s stock worth $7,390,000 after buying an additional 6,400 shares during the last quarter. Finally, D.A. Davidson & CO. raised its stake in shares of STORE Capital by 23.0% during the 1st quarter. D.A. Davidson & CO. now owns 11,377 shares of the real estate investment trust’s stock worth $282,000 after buying an additional 2,129 shares during the last quarter. Institutional investors own 94.93% of the company’s stock.

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In other news, CFO Catherine F. Long bought 4,225 shares of the business’s stock in a transaction that occurred on Tuesday, February 27th. The stock was purchased at an average price of $23.70 per share, with a total value of $100,132.50. The acquisition was disclosed in a legal filing with the SEC, which is available at this hyperlink. Also, insider Christopher H. Volk bought 4,250 shares of the business’s stock in a transaction that occurred on Tuesday, February 27th. The stock was purchased at an average cost of $23.64 per share, with a total value of $100,470.00. The disclosure for this purchase can be found here. Insiders purchased a total of 12,475 shares of company stock valued at $295,603 in the last three months. 0.85% of the stock is currently owned by corporate insiders.

Shares of STORE Capital opened at $26.10 on Friday, Marketbeat Ratings reports. STORE Capital has a twelve month low of $20.08 and a twelve month high of $26.58. The stock has a market capitalization of $5.12 billion, a P/E ratio of 15.26, a PEG ratio of 2.94 and a beta of 0.11. The company has a debt-to-equity ratio of 0.55, a current ratio of 0.34 and a quick ratio of 0.34.

STORE Capital (NYSE:STOR) last announced its earnings results on Thursday, May 3rd. The real estate investment trust reported $0.26 earnings per share for the quarter, missing the consensus estimate of $0.43 by ($0.17). STORE Capital had a net margin of 38.37% and a return on equity of 5.71%. The firm had revenue of $125.80 million during the quarter, compared to analyst estimates of $124.83 million. During the same period in the previous year, the firm posted $0.43 EPS. The company’s revenue for the quarter was up 16.5% compared to the same quarter last year. analysts expect that STORE Capital will post 1.76 EPS for the current year.

Several research analysts have recently issued reports on STOR shares. Capital One reaffirmed an “overweight” rating on shares of STORE Capital in a research note on Wednesday, March 14th. Wells Fargo & Co cut their price target on STORE Capital from $27.00 to $26.00 and set a “market perform” rating for the company in a research note on Tuesday, March 20th. ValuEngine downgraded STORE Capital from a “buy” rating to a “hold” rating in a research note on Friday, February 2nd. SunTrust Banks set a $27.00 price target on STORE Capital and gave the stock a “buy” rating in a research note on Tuesday, April 3rd. Finally, Robert W. Baird reaffirmed a “buy” rating on shares of STORE Capital in a research note on Tuesday, February 27th. Seven analysts have rated the stock with a hold rating and seven have given a buy rating to the company’s stock. The stock presently has a consensus rating of “Buy” and a consensus target price of $27.11.

STORE Capital Profile

STORE Capital Corporation is an internally managed net-lease real estate investment trust, or REIT, that is the leader in the acquisition, investment and management of Single Tenant Operational Real Estate, which is its target market and the inspiration for its name. STORE Capital is one of the largest and fastest growing net-lease REITs and owns a large, well-diversified portfolio that consists of investments in 2,000 property locations, substantially all of which are profit centers, in 49 states.

Want to see what other hedge funds are holding STOR? Visit to get the latest 13F filings and insider trades for STORE Capital (NYSE:STOR).

Institutional Ownership by Quarter for STORE Capital (NYSE:STOR)