As the Coronavirus has gripped the word’s attention, healthcare professionals were quickly left with more questions than answers. Amongst the sea of unknowns, one thing was certain: the speed of a response would be critical in containing the outbreak. A recent 60 Minutes piece highlighted a Canadian firm, BlueDot, that was among the first to raise the alarm of a possible infectious disease outbreak. Using flight data, newspaper reports, medical bulletins, livestock reports, natural language processing and machine learning, BlueDot’s early warning system highlighted the risk on New Year’s Eve, nearly a week before the US Centres for Disease Control and Prevention and the World Health Organization did.
Within two hours of detecting the outbreak, BlueDot sent a warning of the potential threat to its clients, including predictions on where the virus might spread next, providing valuable time to begin planning a response. As one of Canada’s top infectious disease physicians said, “Getting the intel allowed me to…stand up and say we need to pay attention to this…to start thinking about it, start thinking about supplies, start thinking about how busy we might be”, better preparing his hospital than those without access to the data. Having the ability to analyze vast amounts of data to spot trends early on in order to make information decisions in planning a course of action is a powerful skill, both in infectious disease control and investing.
The use of technology and data analysis is built into the DNA of Bristol Gate. Since our inception in 2006, our founding partners believed in the power of predictive analytics to make informed decisions about portfolio construction. Much like how BlueDot asks its model a specific question, “Where will a disease spread?”, we also ask a specific question, “Which companies will grow their dividends the most next year?” We do this by providing over 1,000 factors, compromised of 20 years of financial, economic, and analyst estimate data, to our machine learning model. Our model then efficiently analyzes this vast amount of data to produce a ranked list of dividend growth projections looking forward 12 months.
Beyond using this technology to provide our team a focus list of high potential companies to concentrate their efforts on, we also use it to monitor the ongoing financial strength of the businesses we own. As BlueDot’s technology can provide early warning signs of disease spreading, our dividend growth model can point to early warnings signs of the deteriorating health of a business and potential financial hardship down the road. A weakening, or low dividend prediction from our model provides our Portfolio Managers an early warning to take a deeper look at what fundamental issues would cause this, often allowing them to exit a name in advance of whatever rocky road lies ahead. Just as in the case of a public health crisis, early action and preparedness often results in much a lower overall cost to the portfolio.
Having the ability to analyse a vast amount of data and make sense of it to make faster, more informed decisions is applicable in all fields. In both public health and investing, speed, accuracy, and response are critical components to producing the desired result. By leveraging technology, we give ourselves the best opportunity to achieve success.
Important Disclosures
There is a risk of loss inherent in any investment; past performance is not indicative of future results. Prospective and existing investors in Bristol Gate’s pooled funds or ETF funds should refer to the fund’s offering documents which outline the risk factors associated with a decision to invest. Separately managed account clients should refer to disclosure documents provided which outline risks of investing. Pursuant to SEC regulations, a description of risks associated with Bristol Gate’s strategies is also contained in Bristol Gate’s Form ADV Part 2A located at www.bristolgate.com/regulatory-documents.
This piece is presented for illustrative and discussion purposes only. It should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities and it does not consider unique objectives, constraints, or financial needs of the individual. Under no circumstances does this piece suggest that you should time the market in any way or make investment decisions based on the content. Investors are advised that their investments are not guaranteed, their values change frequently, and past performance may not be repeated. References to specific securities are presented to illustrate the application of our investment philosophy only, do not represent all of the securities purchased, sold or recommended for the portfolio, it should not be assumed that investments in the securities identified were or will be profitable and should not be considered recommendations by Bristol Gate Capital Partners Inc. A full list of security holdings is available upon request. For more information contact Bristol Gate Capital Partners Inc. directly. The information contained in this piece is the opinion of Bristol Gate Capital Partners Inc. and/or its employees as of the date of the piece and is subject to change without notice. Every effort has been made to ensure accuracy in this piece at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and Bristol Gate Capital Partners Inc. accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. We strongly recommend you consult with a financial advisor prior to making any investment decisions. Please refer to the Legal section of Bristol Gate’s website for additional information at bristolgate.com.
A Note About Forward-Looking Statements
This report may contain forward-looking statements including, but not limited to, statements about the Bristol Gate strategies, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events and conditions or include words such as “may”, “could”, “would”, “should”, “expect”, “anticipate”, “intend”, “plan”, “believe”, “estimate” and similar forward-looking expressions or negative versions thereof.
These forward-looking statements are subject to various risks, uncertainties and assumptions about the investment strategies, capital markets and economic factors, which could cause actual financial performance and expectations to differ materially from the anticipated performance or other expectations expressed. Economic factors include, but are not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. Readers are cautioned not to place undue reliance on forward-looking statements and consider the above-mentioned factors and other factors carefully before making any investment decisions. All opinions contained in forward-looking statements are subject to change without notice and are provided in good faith. Forward-looking statements are not guarantees of future performance, and actual results could differ materially from those expressed or implied in any forward-looking statements. Bristol Gate Capital Partners Inc. has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, except as required by securities legislation.