Artem Fokin on Improving with AI and Expert Calls

Episode Summary

Executive Summary: In this webinar, Andrew Walker and Artem Fokan discuss how expert calls and AI tools, particularly through AlphaSense, have revolutionized their investment research processes. They emphasize that expert call libraries and AI-driven summarization have democratized access to high-quality research, enabling individual investors to compete with larger firms. The conversation covers best practices for conducting expert calls, leveraging AI for efficiency, and using AlphaSense features like Grid and Deep Research to gain unique insights and build a mosaic of information.

Main Topics: Expert Calls as a Disruptive Innovation (Priority: 5/5): Expert call libraries have lowered the cost and increased access to expert insights, allowing individual investors to conduct deep research previously only available to large firms. Best Practices for Conducting Expert Calls (Priority: 5/5): Discussion on sourcing experts, screening questions, avoiding bias from former employees, and tailoring questions to the expert's domain (e.g., sales, product, customer). AI Integration in Investment Research (Priority: 4/5): AI tools are used primarily for 'digging' and 'analyzing' stages, providing productivity boosts by summarizing documents, answering specific questions, and preparing the investor's mind for deeper reading. AlphaSense Specific Tools: Grid and Deep Research (Priority: 4/5): The Grid feature allows users to ask multiple questions across many documents (e.g., expert calls) and quickly compare answers. Deep Research generates comprehensive reports to prepare for primary document analysis. Managing Bias in Expert Interviews (Priority: 3/5): Techniques to assess credibility of former employees, including asking for specific examples and evaluating their willingness to return to the company. Keeping Up with New AI Features (Priority: 3/5): Strategies for staying updated on AlphaSense's rapidly evolving features, such as engaging with account managers and product managers.

Key Arguments: Expert call libraries and AI are disruptive innovations that have lowered the cost of high-quality research, enabling individual investors to compete with larger firms. AI is most effective in the 'digging' and 'analyzing' stages of research, not in decision-making, and is best used as a copilot to prepare the investor's mind. When conducting expert calls, it's crucial to tailor questions to the expert's domain (e.g., ask salespeople about sales processes, not accounting) and to use screening questions to assess expertise. Former employees can provide valuable insights, but their biases must be evaluated through follow-up questions and cross-referencing with other data points. AlphaSense's Grid feature allows investors to quickly compare answers across multiple expert calls, identifying the most insightful calls and potential red flags. Deep Research mode in AlphaSense can generate a 30-40 page report that prepares the investor's mind, similar to listening to a podcast before reading a book. The combination of human judgment and AI tools (human + machine) is more powerful than either alone.

Data Points: Number of expert calls read for IWG research: 70 - Artem read 70 expert calls on IWG and WeWork to understand the complex business. Number of FDA clearances for SoftWave: 10 - SoftWave has approximately 10 FDA clearances, more than competitors. Length of Deep Research output: 30-40 pages - Artem estimates the Deep Research feature generates a 30-40 page report. Number of questions in Grid: 12 - The Grid feature allows up to 12 questions per template. Crocs P/E ratio in summer 2022: 5.5-6x - Crocs was trading at 5.5-6x earnings, indicating potential mispricing.

Pivotal Quotes: "I think the biggest process improvement has been expert call libraries. So you can get access to basically unlimited amounts of expert calls for extreme for an annual subscription. That's new over the past 10 years." — Andrew Walker: Andrew highlights the transformative impact of expert call libraries on individual investors' research capabilities. "Human plus machine is more powerful than machine, and definitely more powerful than human." — Artem Fokan: Artem summarizes the philosophy behind using AI as a copilot in investment research, citing Gary Kasparov. "I believe that generally, companies with crappy culture and unhappy employees do not make great products." — Artem Fokan: Artem explains how to weigh negative feedback from former employees by considering the company's product quality and customer satisfaction.

Implications: Investors should integrate expert calls and AI tools like AlphaSense to gain unique insights and improve efficiency. The combination of human judgment and AI is key. Staying updated on new features and engaging with account managers can unlock significant value. This approach levels the playing field for individual investors.