Presentation by Kripa Rajshekhar for DARPA's PPAML'17 workshop in Washington D.C. It outlines the importance of AI in the area of investor diligence, using an equity valuation case study. Kripa is the founder of Metonymy Labs, one of the few commercial firms that have decided to double-down on Third Wave Artificial Intelligence. With the right interdisciplinary expertise and a proprietary natural language processing (NLP) enabled tool-kit, Metolabs is the first-mover in AI augmented diligence (#ADAI). Looking ahead, we believe #ADAI is essential for the coming investment regime where the sources of risk and value are almost entirely intangible, invisible and harder to quantify (85% of the market value in the S&P 500 index is classified as intangible today).

1. (+ Diligence AI) DARPA PPAML
July 28, 2017
Equity Valuation
(AI Augmented Diligence using BayesDB)
Kripa Rajshekhar
(Metonymy Labs)

2. With thanks to DARPA and the MIT ProbComp Team
In particular, the MIT team at PPAML’17:
Feras Saad, Christina Curlette, Ulrich
Schaechtle, Veronica Sara Weiner & Vikash
Mansinghka

3. Traditional accounting misses most of the value in firms

4. www.metolabs.com
Metonymy Labs: AI augmented diligence (#ADAI) can help

5. For references and data: http://pages.stern.nyu.edu/~adamodar/
CURRENT
FUTURE?
Valuation today trades the big picture for price benchmarking

6. Except at some Hedge Funds, Multivariate Normals rule valuation
Source: Prof. Damodaran’s estimate of PE as of January 2017, http://pages.stern.nyu.edu/~adamodar/

7. But financial metrics are neither Normal nor linearly composable
Source: NYSE data, Analyzed using BayesDB

8. A more principled way to relate 80+ variables from 1400+ firms?
Source: NYSE data, Analyzed using BayesDB

9. A reasonable estimate of the joint probability distribution is key
Source: NYSE data, Analyzed using BayesDB

10. Why? Correlation is not causation, it may not even model relation
Source: NYSE data, Analyzed using BayesDB

11. Inconvenient Truth: Correlation often misses essential connections

12. Future: Intuitive and statistically grounded notions of connectedness

13. 2000-02
Dot Com
Bubble Burst
2007-08
The Great
Recession
#ADAI
can help
The stakes are high, S&P 500 Index (1996-2016)

14. “It was inevitable that meaning would force its way back in”
Jean-Pierre Dupuy
www.metolabs.com
Cause:#ADAI Tweet:@metolabs LinkedIn:kripar