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Hedge funds have turned to a novel new tactic, a fleet of small, shoe-box sized, satellites, to gain insights into market trends and an edge in their trading strategies, according to a new report in The Wall Street Journal.
The constellation of diminutive satellites, known as “cubesats”, was produced and launched by Planet Labs, Inc., which was founded by three former NASA scientists. The cubesats are remarkably cheap and constructed using off-the-shelf components, Air and Space Magazine reports. So far, Planet Labs has 113 Dove imaging cubesats in orbit right now, which take complete images of the Earth’s surface each day. The company plans to have 150 in orbit by the end of the year, which will allow it to image the Earth’s entire surface daily.
This data has proven useful not only to emergency first responders during natural disasters, but to hedge funds as well, allowing them to scope out images of potential investments. The daily imaging data can also be curated into weekly updates on consumer trends and market insights, The Daily Caller notes.
Planet Labs, has in turn, agreed to supply its daily trove of satellite images to Orbital Insight, which analyzes and mines the images for market insights and trading tips for hedge funds. Orbital offers its investment firms and hedge fund clientele tips on how stock prices will move. For instance, Orbital predicts the revenue of retail giants such as Wal-Mart and Target based on the number of cars in their parking lot, Financial News reports.
In fact, The Financial Times reports that hedge funds have also turned to satellite images to scrutinize the progress of the Chinese economy in light of the fact that official economic numbers may not be reliable. Such information is provided by SpaceKnow, a US satellite company that runs the China Satellite Manufacturing Index, which measures Chinese manufacturing activity by observing industrial plants across China.