Sentiment Analysis

From Crypto To Interest Rates: A Sentiment Analysis Of Q1 2018 Earnings Calls

Every quarter, thousands of pages of earnings call transcripts are generated and analyzed by equity analysts for signals about how individual companies — and the market — will perform.

[REITs]

Q2 hedge fund letters, conference, scoops etc

Our Sentiment Analysis Report summarizes last quarter’s top keyword mentions and provides detailed sentiment analysis across all industries.

We used Sentieo’s Transcript Sentiment Analysis feature to analyze earnings call transcripts and understand the topics (cryptocurrency, trade wars, and interest rates) that companies discussed most frequently last quarter. Check out our findings!

Introduction and Key Findings

Language is one of the last realms of financial data to be quantified. Every quarter, thousands of pages of earnings call transcripts are generated and analyzed by equity analysts for signals about how individual companies, and the market, will perform. This report shows how Sentieo Document Search makes that data more accessible. Our quarterly report is available at the end of each earnings season to financial journalists and equity analysts. Your feedback is welcome at hello@sentieo.com.

Key Findings

Sentiment Analysis

Management vs Investor sentiment is diverging.

Our sentiment analysis on transcripts shows that a decoupling is taking hold between the language from company management and market participants. Management continues to be upbeat during earning calls and presentations, while sell-side analysts and investors are taking a more cautious stance. T

Keyword Mentions

Two themes we look at closely in this report are Cryptocurrency and Trade Tariffs. When analyzing the number of mentions of crypto by company, the companies that are leading the conversation are currently Nvidia (crypto chip vendor), Visa (payment company), CBOE (professional crypto derivatives exchange), and Salesforce (CRM and enterprise SaaS vendor).

Talks of trade wars have unsurprisingly become central to many companies, with a marked edge towards uncertainty, caution and even fear regarding the effect it will have on business.

Keyword Trends

Mentions of Trump

  • Mentions of President Trump have remained fairly strong this year to date. While the debate on the tax reform was the key theme of late 2017, trade tariff discussions have taken over.
  • To get real-time email alerts of Trump mentions, check out our Trump Tracker.

Sentiment Analysis

Mentions of Trade Tariffs

  • Specifically, mentions of trade tariffs (and synonyms like “China tariffs”) had already hit new highs in Q4 2017, but have since continued to increase and hit a new record in Q1, tripling y/y and up over 50% q/q.
  • Companies most actively discussing the tariffs include Cooper Tire and Rubber, Kansas City Southern (domestic and international rail transport services), and Buckeye Partners (petroleum distributor). This makes sense considering China’s tariff announcement in April (CNBC), as well as Trump’s recent retaliatory list of
    now tariffed Chinese items (Business Insider), which includes train and rubber machinery, rail parts, and oil / gas drilling parts.

Sentiment Analysis

Mentions of Unemployment

  • Unemployment mentions were the highest in Q4 2017, growing 26% since Q4 2016. Mentions have remained flat, at the same level in Q1 2018, indicating that it remains a significant focus for companies.
  • Management teams continue to evaluate the short and long term effects of a low unemployment rate (currently 3.8%, the lowest in the last fifty years) on their wages and operations.

Sentiment Analysis

Mentions of Interest Rates

  • Mentions of interest rates peaked on Q4 2017 earnings calls. The Fed’s interest rate increases this year are part of a gradual series of steps to return rates to historically normal levels, and they reflect both the Fed’s confidence in America’s economic strength and its commitment to bring the inflation rate to its target of 2 percent. (New York Times)

Sentiment Analysis

Mentions of Artificial Intelligence

  • Mentions of AI and its synonym “machine learning” reached an all-time high in Q1 2018.
  • While the wave of growth seem to be ebbing, we are now at a level where we see nearly 1000 documents a quarter, and it is still up nearly 40% y/y.
  • Salesforce (with its AI-powered CRM, “Einstein”), Nvidia (deep learning services from robots to healthcare to self-driving cars), and Intel are leading these discussions. The presence of Salesforce in the top companies stresses how we are starting to move away from the basic technology providers (eg: Nvidia), up the value chain with Salesforce (B2B), and steps closer to the consumer.

Sentiment Analysis

Mentions of Cryptocurrency

  • Mentions of cryptocurrency (and theme peers including “bitcoin,” “ICO,” “ethereum,” etc.) have held strong at a record level despite the market value meltdown of Bitcoin and other publicly traded tokens. After growing 88% q/q in Q4 2017, mentions have remained flat at ~6000 documents in Q1 2018.

Sentiment Analysis

  • Looking at crypto mentions by sector, Tech, Financials, and Consumer Discretionary continue to lead the pack.
  • By company, notable leaders including Nvidia, Visa, CBOE, Salesforce and Mastercard.

Sentiment Analysis

  • By region, the U.S., Canada, and Europe represent ~80% of the mentions, stressing how much the theme seems to be effecting established market-listed players in those regions more than in the East.
  • To get real-time email alerts of cryptocurrency mentions, check out Crypto Tracker.

Sentiment Analysis

Mentions of Autonomous Vehicles

  • “Autonomous vehicle” or “self-driving car” mentions also reached an all-time high on calls in Q4 2017, and have remained high in Q1 2018. GM had the most mentions likely due to its announcement in March that it would be investing $100 million into production versions of its self-driving, electric Chevy.

Sentiment Analysis

Sentiment Analysis Graphs

Sentiment Change Quarter Over Quarter

  • In the real estate industry, management sentiment saw a large negative shift from Q4 2017.
  • Every other sector saw a marginal sequential improvement, in particular Healthcare and Consumer Staples.

Sentiment Analysis

  • On the other hand, analyst sentiment became more positive in Consumer Discretionary, Consumer Staples, Industrials, Technology, and in Real Estate.
  • Utilities, Materials, Telecoms, Financials, and Healthcare degraded, with a large swing for Utilities and Materials.

Sentiment Analysis

Sentiment Change Year Over Year

  • Comparing Q1 2018 to Q1 2017, management has become more positive overall, with sensible improvements in Telecoms and Consumer Staples. Utilities and Real Estate are the only two sectors truly retracting y/y.

Sentiment Analysis

  • Analyst sentiment has degraded more significantly in most industries, except for Telecoms.

Sentiment Analysis

Methodology

We used Sentieo’s natural language processing technology to scrape all earnings transcripts published in the last eight quarters (the quarter shown actually represents the update for the prior quarter). We then processed and cleaned the data to separate keywords from filler words (like “or”, “and”, etc.) and separate the sections in which management is speaking from those in which equity analysts are speaking.

How We Derived Sentiment Analysis

Sentieo uses the Loughran-McDonald dictionary to assign a positive or negative score to each keyword in its database.

In this report, you will see the aggregate scores of both the management sections of earnings call transcripts and the analyst sections of transcripts.

The sentiment percentage in the associated graphs is a result of the following formula:

Percentage of Net Positive Words = (Positive Word Score — Negative Word Score) /Total Number of Words

How We Derived Keyword Mention Lists

We rank ordered the most frequently mentioned keywords in each sector in each quarter and present the top 10 in rank order in the sector lists.

How We Derived Keyword Trends

We ran open-ended search queries to match key topics of interest in the news (Trump, AI, Autonomous Vehicles, Cryptocurrency) and find all mentions of those topics. We used Sentieo Search Analytics to aggregate the mentions by quarter for the graphs shown in this section.

Article by Sentieo

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