It seems like everywhere you look, there is a company aiming to disrupt human financial advisors and money managers. Robo investing firms such as Wealthfront and Nutmeg provide automated long-term savings plans for investors at a fraction of the cost of professionally managed funds. Elsewhere, websites like Estimize and TipRanks track financial analyst recommendations and financial estimates of stocks to easily reveal whether these paid professionals provide any value to the public.
Further disrupting the financial analyst industry is Kensho and their machine learning algorithm robot Warren (name after Warren Buffet). First reported in the Financial Times today, Kensho has raised $15 million in the financing of a series A round led by Goldman Sachs. The funding was added to a previous $10 million seed round which included investments from Google Ventures, Accel Partners and Breyer Capital. The funding is going towards helping Kensho expand the trader and asset management adoption of Warren as it automates the role of stock analysts.
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Ask Warren Your Stock Questions
Apple has Siri and Microsoft has Cortana, so it makes sense that the financial industry has its Warren. Like those two products, Kensho users are able to ask Warren questions on which it sifts through millions of data points to provide answers. Unlike Siri and Cortana, Warren is focused on the stock market as it analyzes fundamental data and price reactions to answer stock-related questions. Examples include questions such as which stocks outperform the market when New Homes Sales numbers are below expectations or which firms trade in tight correlation following specific types of news.
Founded by Daniel Nadler and Pete Kruskall, one of the ideas behind Kensho is that asset managers and traders are limited in their ability to backtest ideas. Therefore, while their gut may sense an opportunity, validating the idea means crosschecking by analysts and quants, who may or may not have the available data to analyze, or that the trade is no longer relevant by the time results are found.