NYC startup Estimize.com is already popular for crowd sourcing data from Wall Streeters about individual stocks will do.
Now the company is applying the same, successful logic predict mergers and acquisitions.
For stocks, the aggregation of knowledge from loads of professionals at hedge funds, private equity shops has been hitting the mark more often than not.
So why not try it on deals?
On a separate site, the Estimize team will crowd source knowledge from its intelligent user base to track what companies are going to do a deal and when. The new platform is called Mergerize.com.
On Mergerize.com you’ll find more than 4,800 public companies, startups and private companies.
There are a bunch of reasons why this is huge for Wall Street — for traders especially — and Estimize CEO Leigh Drogen explained some of them in a statement.
…for the quants, I expect that they will use Mergerize data to exclude certain stocks from their trading at certain times given that there is outsized risk associate with M&A transactions in their models. If Mergerize data can mitigate this risk by putting a “no trade” tag on certain stocks, it should be very valuable. For discretionary traders, specifically of the event driven persuasion, having a set of M&A expectations should allow them to take advantage of their own beliefs if they see that they are significantly different from the crowd. If the market feels a deal will take place, and you believe there’s a premium built into a stock because of that expectation, but you don’t think that deal is going to happen, then you probably believe at some point that premium is going to come out, and you should be short. My bet is also that there will be a high correlation between the velocity of people predicting a certain deal and the implied volatility of the target in the deal. I’m sure traders will figure out how to utilise that correlation.
This all comes on the heels of Estimize completing a $US1.2 million round of funding from investors.
You can check out what Mergerize looks like below. It’s pretty straight forward. Each bubble represents a company. The bigger the bubble, the more users have added their two cents about a potential deal.
Disclosure: Estimize is a contributor to Business Insider.
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