revenue per employee

The Source of #AI Hype

Apple doesn't mention it... Amazon doesn't mention it... Alphabet (aka - Google) does mention it - but doesn't link it specifically to financial performance... IBM? You betcha. More than 155 times... In case you have been living under a rock - which, now that I think of it, has some increasing allure - artificial intelligence (and its slightly less sexy twin, machine learning) has succeeded 2016's marketing darling, blockchain, to become the blinking-neon-sign-outside-your-hotel-room term for 2017. Sorry, folks. The budgets have already been allocated. Go find predictive analytics (2014) and digital transformation (2015) in the dust bin of over-exposed marketing terms if you are not yet hip to how this game is played. Now, let's take a quick step back for a second: This is NOT an anti-AI hit piece. Nor is this an IBM-gotcha piece. I am a fan of both. But, this is simply a commentary based on the convergence of connect-the-dots exercises that have come out of our modeling and research. Yes, AI has an incredibly promising - if not, slightly scary [...]

By | 2017-04-28T10:17:09+00:00 April 27th, 2017|Alphacution Feed|

@VirtuFinancial: Valor #HFT Morghulis

If you read Part 1 to this post (from December 15, 2016) then you know that at least as of the end of 2015, financial reports from HFT bellwether Virtu Financial illustrated strong and even increasing profitability. Our surprise from these impressive figures came from the countervailing hypothesis that HFT was already well past its prime (given the evidence of prop shop closings and consolidations over the past 5 years or so). Apparently, Virtu didn’t get that memo. However, upon closer inspection of the most recent quarterly reports – which as of now yields details over 11 quarters starting in calendar Q1 2014 (March) and ending in calendar Q3 2016 (September) – even this bellwether may have seen its best days. Exhibit 1 (below) is one perspective of what this recent turn of fortune looks like: Some translation: After spiking in Q4-2014 and peaking in Q1-2015 at an annualized (adjusted net trading) revenue per employee (RPE) of over $4.1 million, trading revenue as of the end of Q3-2016 has returned to somewhat less [...]

By | 2017-04-28T10:17:25+00:00 January 12th, 2017|Alphacution Feed|

@VirtuFinancial: Let the good #HFT times roll!

It's March 25, 2016 - and I crack open the newly minted 10-K from our friends at Virtu Financial. The equivalent of that new car smell wafts northward from its fresh digital pages. The anticipation is palpable. With years of intense focus and vigorous debate on the mechanics of #HFT - and the jealous wonderment surrounding its stratospheric profitability - it is both rare and puzzling that the public should get a real, data-driven look inside to support or debunk the mythology of this ultra-secretive corner of the global financial landscape. Searching within this fresh set of data, I update our model - and the output creates one of those WTF cognitive dissonance moments. After all, isn't the heyday of HFT over?! Haven't numerous high-speed shops consolidated or folded? As a refresher, the vid below is what we were saying back in July 2013 (while at Tabb Group): Hello from 2013! Struggling is not what's going on here. By the looks of things at Virtu - at least as of the [...]

By | 2016-12-14T15:22:44+00:00 December 15th, 2016|Alphacution Feed|