Derwent Capital Markets, a family- owned hedge fund, will offer investors the chance to use Twitter Inc. posts to gauge the mood of the stockmarket, said co-owner Paul Hawtin. The Derwent Absolute Return Fund Ltd., set to start trading in February with an initial 25 million pounds ($39 million) under management, will follow posts on the social-networking website. A trading model will highlight when the number of times words on Twitter such as “calm” rise above or below average.
“Sentiment and mood dramatically change the impact of positive and negative news stories,” said Hawtin in a telephone interview. “If the market’s in a very positive and bullish mood, it can shrug off bad news -- bad news comes out and you expect the Dow to fall, and it doesn’t...The only risk for us is if Twitter falls away and people just don’t use it any more,” Hawtin said. “But we believe that it can only get bigger and better, and that more and more people will be using it to express their feelings.”