EXCLUSIVE: How Delphia Hopes To Use Personal Data And Algorithms To Help Investors Beat The Market

The market doesn’t have to feel like a casino.

That’s according to Delphia, the firm behind the world’s first AI investment strategy that anyone will be able to improve with their data.

Traditionally, the retail investing public often comes to a realization that the investing game, so to speak, is rigged; they lack access to the information and systems that institutions have.

Delphia, which has developed revolutionary algorithms that crunch terabytes of data to predict the fundamentals of thousands of stocks, is looking to change that belief.

In learning more, Benzinga spoke with Delphia co-founder and CEO Andrew Peek.

Context: Delphia’s origins date back to the Cambridge Analytica era.

“I discovered a research lab that was working with survey data not dissimilar to the nature of the data Cambridge Analytica was procuring, but they had an incredibly different business model,” Peek explained.

“Cambridge Analytica was using data to effectively target advertising with a political agenda, whereas this research lab was trying to help you use your data to your own benefit.”

With fifty questions or so, Vox Pop Labs was able to derive insights that assisted them in forecasting elections with unprecedented accuracy.

“Most notably, they called Brexit ten days before the vote.”

Given that elections weren’t a great business model, the lab’s director looked for ways to use data to serve a greater purpose; Vox Pop Labs’ Clifton van der Linden and Peek pivoted the lab to predict the stock market and hired a world-class asset management team to build out its stock selection algorithm.

“Now we want to use your data to improve stock selection algorithms with the hopes of improving your investment returns, over time.”

How It Works: Alongside Vox Pop Labs’ expertise, Delphia applied proprietary algorithms to data and started providing investment strategies to retail in exchange for no fees.

Investors come onto the platform, make an account, answer questions on risk tolerances, and provide informed consent to data they want to contribute.

Consumer data helps predict the fundamentals of companies along the lines of Netflix Inc NFLX such as sales or churn, for example.

“At the same time, we also made this investment strategy available to accredited investors and institutions,” the CEO said. “They pay fees and those profits are evenly distributed to everybody contributing data.”

So, in addition to retail investors having free access to active investment, they receive data dividends from Delphia’s accredited or hedge fund business.

What To Expect: For accredited and hedge fund investors, fund exposure is split between long and short positions across 2,500 or so equities.

Since launching in April, that particular market-neutral strategy is up nearly 40%.

With retail now in the picture, technology and regulatory constraints make it so Delphia has to switch up its strategies.

At present, the firm spreads retail across 200 or so stocks.

With greater breadth, portfolios are de-risked, Peek explained.

“If you get one pick wrong out of ten, it has a pretty big impact on your overall returns. You get one pick wrong out of 200, not so much, right?”

Since launching August 9, that particular strategy is flat despite many rate-sensitive and growth names trading lower into year-end.

“We’re trying to give you a smaller chunk of exposure to market beta and, on top of it, we put an active return, which is the alpha. That helps insulate the portfolio when the market goes down.”

Reach And Retain: With the pandemic winding down and active traders returning to work, Delphia is at an advantage.

“We are trying to appeal to the fact that people are low on bandwidth and just can’t hold hundreds of stocks in their head,” Peek said. “In terms of retention, beyond returns, we have interesting prize-linked rewards programs.”

Every week, the data one pledges to contribute to Delphia enters them for a chance to win up to $10 million, among other smaller cash prizes.

Going Forward: Delphia’s team is about forty strong.

The firm’s intention is to raise that number, eventually, to build more application features, faster, as well as raise funds to subsidize alternative data purchases, among other things.

With cash flows are beginning to tip positive, Peek ended the conversation with optimism around the firm’s potential.

“Attitudes around personal data have shifted dramatically, and people are acutely aware that data is valuable now and ready for products that use it in an explicit way to benefit them,” he said.

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