Q4 Inc. 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.