When Tom Liston needs insight on one of India's largest companies, he doesn't pick up the phone to call a long-cultivated, top secret source – he logs on to Twitter to check up on a stranger who broadcasts messages semi-anonymously from the other side of the world.
“This guy trolls all the websites and reads things about Satyam [Computer Services Inc.] that would take me five days to go through. He finds summaries and posts them on Twitter,” says Mr. Liston, the Toronto-based director of research at Versant Partners.
Mr. Liston is no day trader – he checks in on Satyam because it competes with CGI Group Inc., a company he follows in his role as software analyst for Versant, a boutique brokerage. Mr. Liston is one of the growing number of investment professionals who are trying to figure out how to use Twitter to tap into the collective consciousness of market participants and communicate more directly with clients.
“I like to try and be cutting edge, and Twitter is another channel,” he says. “I'm using it as a little tool and I know I'm not likely to find something material. But I do get little bits of information on some of my companies – you find some employee somewhere who just lost his job or some other little nugget. Those things can be helpful.”
For investors, Twitter is as close to a ‘tailored information portal' as the Internet has ever offered. — Mark McQueen, CEO of Wellington Financial LP
In addition to Mr. Liston's personal account, which is as likely to feature updates about soccer scores as investment opportunities, Versant is now blasting its research notes to clients via Twitter – likely a Canadian first.
Venture capitalist Mark McQueen, president and chief executive officer of Wellington Financial LP and one of Canada's most popular financial bloggers, has his own personal Twitter feed to which users can subscribe, in addition to Wellington's corporate feed.
“For investors, Twitter is as close to a ‘tailored information portal' as the Internet has ever offered,” says Mr. McQueen, who uses Twitter and his blog to increase the profile of his firm. “Twitter gives everyone with a point of view a chance to get in on the action, without the time commitment required to have a credible blog.”
You find out which stocks are being talked about, what people are skeptical about, and where people think the markets are going. — Howard Lindzon, hedge fund manager
While investment professionals are taking tentative steps toward Twitter – Mr. McQueen can only think of a few in Canada who are actively posting to a corporate profile, likely because of compliance concerns – day traders and novice investors have been using the service since its inception.
It was with this in mind that hedge fund manager and Web entrepreneur Howard Lindzon and his partners founded StockTwits.com , which is a Twitter-based website. The site's power is in the way it aggregates opinion and sorts messages by stock symbol, allowing users to see all of the comments made about a stock or exchange in real time.
The free, six-month-old site has 54,000 members, although only 2,000 are active contributors. Mr. Lindzon estimates that only 20 per cent of frequent posters are professional traders, while the rest are do-it-yourselfers eager to share their insights. Investors like to talk about their trades, he says, and the sense of community helps many shed feelings of isolation that can come with active trading.
“You can think of it as a human stock ticker,” he says. “The quality of the dialogue is quite high, because what you get are people who are working alone and want to share their stories. You get a sense of camaraderie as people try to help each other make money.”
