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Sep 15, 2013

Hedge fund managers turn to spy technology

‘Explosive growth’ of satellite imagery sales to hedge funds 

Hedge fund managers are increasingly adopting satellite spy technology to physically check out land, infrastructure, buildings, turnover rates and more before deciding to make an investment, according to media reports. The practice is set to grow at a faster pace as data costs drop, reports the Financial Times.

Satellite intelligence is of particular interest to hedge fund managers thinking of investing in mining companies, shippers, restaurant chains, agricultural companies and others, the newspaper notes, citing at least one company that sells such intelligence.

The managers can use the data to assess risks related to pollution around coal mines, the quality of ore in a given project and the progress of construction projects. Satellite data can help potential investors determine which of two coal mines has better production, and can even use infrared measurements to determine the health of crops before investing in commodities or an agricultural company.

Hedge fund managers are also using satellite imagery to determine the rate of flow through parking lots at retail outlets, restaurant chains and malls to get an estimate of quarterly results ahead of their release.

Mike Gantcher, head of sales at RS Metrics, told the FT his company has added 25 hedge fund and money manager clients in the past two years, and growth this year has been ‘exponential’.

RS Metrics, based in Chicago with offices in New York, Colorado and Colombo, Sri Lanka, ‘provides corporate, investor and government clients with proprietary data based on quantitative analysis of high-resolution satellite imagery, demographic data and open-source research.

‘Our clients include many of the most well-respected investment firms on Wall Street, some of the largest and most well-known US retailers and real estate investors/brokers, and other industrial companies, government agencies and educational institutions,’ the company says on its website.

The company adds that it can provide retail traffic data on companies including Home Depot, Safeway, Starbucks, JC Penney, and others. It says it can also track movement of shipping containers, piles of raw materials, fracking, oil flaring height and more to give investors an independent assessment of the likely financial health of a certain company.