Paul

About Paul Rowady

Paul Rowady is the Director of Research for Alphacution Research Conservatory, a research and strategic advisory platform uniquely focused on modeling and benchmarking the impacts of technology on global financial markets and the businesses of trading, asset management and banking. He is a 30-year veteran of the proprietary, quantitative and derivatives trading arenas. Contact: feedback@alphacution.com; Follow: @alphacution.

Open Access Library Archive

The purpose of the Open Access libraries, and the solicitation to register for access to that library, was to openly share certain research output as examples of what could be found in the Premium Access Library, and to assess levels of interest in various themes. The Open Access libraries originally contained traditionally-formatted reports (i.e. - PDF documents) and various exhibits (i.e. - Powerpoint slides). The Open Exhibit Library was an assembly of all the exhibits that had been published in the various Feed posts. For technical and administrative reasons, Alphacution has temporarily discontinued updates to these libraries until such time as the functionality and security of the various site components can be enhanced for ease of maintenance and navigation. For those of you who have registered to access these components of Alphacution's research archive via our original login functionality, we have assembled those documents that were made available for download as follows. For the foreseeable future, additional document downloads will be found in specific Feed posts: 1) Executive Summary: The [...]

By |2020-10-05T21:24:57-04:00December 31st, 2018|Open|
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What Is The US Stock Market Really Made Of?

Our recent foray into an analysis of the SEC's Form 13F reporting continues to bear fruit; arguably more fruit than can unreasonably be consumed at even the most festive holiday feasts. And yet, we must soldier on, if for no other reason but curiosity... Here's the quick setup for this one: Each quarter, the US Securities and Exchange Commission (SEC) publishes its list of equity and equity-linked securities for which certain asset managers (with aggregate holdings valued greater than $100 million) must report their gross notional long positions. (For more background, refer back to "Goldman Sachs' Book: Hiding in Plain Sight.") For all intents and purposes, this comprehensive list IS the quarterly rolling contents of the US "stock" market. In early 2010, this was a list containing nearly 15,000 unique CUSIP numbers. So, it occurred to us take a closer look at how these contents - from plain vanilla equities to convertible preferred's to options and, yes, to exchange traded funds (ETFs), among other product types - have migrated over [...]

By |2020-08-17T07:14:05-04:00December 28th, 2018|For Subscribers|
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Top 10 Stories of 2018

“Study the science of art. Study the art of science. Develop your senses — especially learn how to see. Realize that everything connects to everything else.” — Leonardo Da Vinci 2018 was a truly fascinating one here at Alphacution, thanks to you... A little over three years into this project - and a ton of diverse, experimental research on the impacts of technology within the global financial services ecosystem - and, in many ways, we have only just begun to hit our stride. This is mainly because of something you and me now have in common: It seems that I have finally figured out how to strike the chords that you want to hear... In 2018, our newsletter grew to be distributed to nearly 20,000 capital markets executives; mainly including those stakeholders related to the most advanced trading strategies and trading operations in the world. For each of the last 15 newsletters, average distribution was ~16,400 and average opens were ~5,500 (or, over 33%). This audience includes most of the founders, CEOs, senior executives [...]

By |2020-10-05T21:24:43-04:00December 27th, 2018|Open|
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Citadel Securities’ Book: Hiding in Plain Sight (Teaser #1)

Image Credit: Liu Bolin “The problems are solved, not by giving new information, but by arranging what we have known since long.” – Ludwig Wittgenstein Like discovering a secret doorway into a long-forgotten section of the Great Library of Alexandria, our recent focus on the data contained in the SEC's Form 13F has been nothing short of captivating. Yes, one interpretation of these reports - the most common interpretation - is that these reports merely represent a fleeting and illusory fragment of an asset manager's holdings. However, if you were hunting for puzzle pieces (to reverse-engineer the inner workings of a complex system) in the equivalent of a sensory deprivation chamber, and then someone lit a match for a split second, the amount of information you could collect off the back of that spark would be profound. In other words, the findings so far from this foray of ours into the 13F analysis has been quite valuable. As we will begin to demonstrate, even fragments of position- and portfolio-level attribution data can [...]

By |2020-10-14T21:50:14-04:00December 20th, 2018|For Subscribers|
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Digging Liquidnet With ITG’s Shovel

"Not that the story need be long, but it will take a long while to make it short." - Henry David Thoreau With the help of our ITG modeling - and a recently discovered S-1 filing for Liquidnet from 2008 - we present the following storyboard. Though some of you will miss the lyrical wordsmithing, this one is presented without the usual auditory accompaniment. Perhaps this will help lubricate some questions from the audience... Using data from our ITG model, and some old financial data from Liquidnet's S-1 filing in 2008, we were able to leverage current headcount and contextual revenue per employee (RPE) estimates to update the current revenue estimate for Liquidnet. This is one small example of the benefit of Alphacution's "Sudoku Puzzle" modeling methodology. As always, if you value this work: Like it, share it, comment on it – or discuss amongst your colleagues –  and then send us feedback@alphacution.com. As our “feedback loop” becomes more vibrant – given input from clients and other members of our [...]

By |2020-08-17T07:14:06-04:00December 19th, 2018|For Subscribers|
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Sorry, Virtu. You Still Need a Lift

"Don't get involved in partial problems, but always take flight to where there is a free view over the whole single great problem, even if this view is not a clear one." - Ludwig Wittgenstein For once, there might not be much more to say after a title like this one - and I'm not getting paid to offer strategic advice to the players on this rink - so I will be brief. First and foremost, my hometown Red Wings have recently been replaced in the sub-basement of the NHL's Atlantic Division by the Panthers, so hopefully some things have changed for the better for the boys in the D. Just sayin'. Second, we did a little work to update our Virtu + GETCO + Knight Capital + ITG pro forma modeling, and - uh - how about the good news first? Picking up from where we left off in the most recent post, Virtu, ITG: Much More Than Meets The Eye, which focused mainly on Virtu's Q3 print of [...]

By |2020-08-17T07:14:06-04:00November 29th, 2018|For Subscribers|
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Goldman Sachs’ Book: Hiding in Plain Sight

Image Credit: Liu Bolin "The problems are solved, not by giving new information, but by arranging what we have known since long." - Ludwig Wittgenstein It turns out, there is a ton valuable data lying around, hiding in plain sight - just waiting for any fool to come along and turn it into something else, something greater. And, it also turns out that I am one such fool who is captivated - perhaps even obsessed - with solving puzzles (like this 8,000-piece beauty purchased - unassembled - at the Louvre, on the right); turning what usually appears as scraps of data into something much clearer, much bigger, and much more valuable - like a piece of art. So, you might imagine my excited anticipation to finally work on unlocking some of the value contained in 13F holdings reports. (I know, right?! Who isn't?) Here's the gist: Basically, all institutional investors - whether they be public or private entities - with discretion over $100 million or more of US equity assets [...]

By |2020-08-17T07:14:06-04:00November 28th, 2018|For Subscribers|
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Alphacution Debuts on TD Ameritrade Network

Many thanks to Oliver Renick (@OJRenick) and the team @TDANetwork for this one. We had some fun discussing the IBM-RedHat deal, and the implications for the larger cloud infrastructure and AI segments of the enterprise IT arena. Also touched on some thoughts for NVIDIA, AWS, Google and HPE. Based on our recent post, IBM Hides Watson Under a Red Hat. Link to Video here. It's a good one. Enjoy... As always, if you value this work: Like it, share it, comment on it – or discuss amongst your colleagues –  and then send us feedback@alphacution.com. As our “feedback loop” becomes more vibrant – given input from clients and other members of our network, especially around new questions to be answered – the value of this work will accelerate. Don’t be shy…

By |2020-12-03T21:37:18-05:00November 27th, 2018|Video|
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Virtu, ITG: Much More Than Meets The Eye…

"The real voyage of discovery consists, not in seeking new landscapes, but in having new eyes." - Marcel Proust (1923) “Develop your senses — especially learn how to see. Realize that everything connects to everything else.” — Leonardo Da Vinci (~1500) If you  - like the precious thousands of other professionals, mostly notably from the high-performance end of the global trading spectrum, who will venture this way - have come this far in search of Alphacution's unique brand of irreverent spin on Virtu's 3rd quarter earnings announcement, then you are about to miss most of the intelligence that is on offer from the growing portfolio of evidence that we are assembling here. Yes, our modeling and charting and narratives surrounding this latest catalyst from Virtu - along with its and others' exploits in this rare corner of the financial world - can be found here and throughout our Feed. But, for those who choose to stretch their go-to frame of perspective, there is much more going on here than initially meets the eye... What is actually going on [...]

By |2020-10-14T21:44:34-04:00November 15th, 2018|For Subscribers|
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Robinhood and Payments for Order Flow

It was a recent father-son (and dog) road trip. Several hours in the car, on our way to support daughter / sister, Emma, at her final regatta of the season. Head of the Hooch in Chattanooga, Tennessee. And, an opportunity for some undistracted conversation. Among the many topics was our ongoing debate about how to trade Tesla (TSLA). Eddie has proven himself to be fairly decent scalper of this volatile name, so I usually ask how he is positioned and the levels he thinks are meaningful. Anyway, it turns out, he is trading on the Robinhood platform - no more than a few shares at a time - and paying zero commissions which, of course, improves his net profitability. This is the main attraction on top of the fact that he can toggle between trading stocks, playing video games, watching YouTube, Instagramming with his friends and listening to music all on the same device. (No wonder he is always wiped out!) So, this got me to thinking about some of [...]

By |2020-10-14T21:50:30-04:00November 14th, 2018|For Subscribers|
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