When people ask me the (unknowable) question of how AI tools will impact alpha curves in long/short investing, I actually think we have an interesting sandbox to evaluate that question in the evolution of Consumer L/S investing. I started my career as a hedge fund analyst in an 8 person consumer team, and pure consumer investing was a flagship team for many Tiger Cubs in the 1995-2015 era. The process was pure scuttlebutt research and I spent a lot of my day calling Wendy’s franchises, Cabela’s gun counters, running quarterly surveys and slicing and dicing grocery scanner data and constantly updating a master list of global SSS data. Technology has dramatically changed Consumer L/S investing and, in particular, the emergence of credit card panels that can give almost a real-time signal of company fundamentals made so much of that scuttlebutt research obsolete. And you had a window of time, maybe 5-7 years, where investors with the “old” approach were able to adapt these new methods and absolutely crush it. Over the last 5-10 years, however, fundamental alpha in the Consumer L/S space has become much more difficult to harvest. Consumer is no longer a flagship team at most single managers, and many Consumer PMs have drifted into TMT. Some of this is the macro/industry evolution of where EV has been created, for sure (see: AMZN), but more of my friends simply won’t traffic in names where alt data is the deterministic resource. It’s an arms race, and quants on balance are winning that arm’s race. This has created a tougher playing field, but has also created all sorts of monetizable distortions and the domain knowledge of different nuances around these panels (which providers are included, Midwest vs. coastal bias, which providers are losing a key CC panel, etc) has adapted to still offer interesting “third order” alpha pools for investors who have adapted. But it certainly is not the same “data good, stock is a long” set-up that prevailed in 2008. What has been bad news for investors has been great news for the data ecosystem, as the arms race to stay current has included $5-15+ data and data engineering budgets. In the broad consumer investing ecosystem, data has taken share of wallet from labor, and quants have taken share from fundamental. Get ready for this prior to asset itself in other sectors, in my view. (My hunch is the “next Consumer” is Biotech investing, but we will see.)