• All Twitter, Friday, August 19, 2011 4:21 PM

What fortunes doth Twitter feeds keep? Believe it or not, there's a new hedge fund that uses Twitter sentiment to make its investments, and -- so far -- it's apparently beating the street.

Derwent Capital "invests based on a randomly selected portion of all tweets on Twitter, analyzing them for sentiment," All Twitter explains. "The basis for Twitter sentiment as a predictor of the stock market is an academic paper published last year which found that certain emotive words in tweets ... signaled a rise or a fall in the stock market."

The fund returned 1.85% in its first month of trading, ending in July. "This not only beat the S&P, which fell 2.2 percent that month, but it also beat out the average of other hedge funds, at 0.76 percent," All Twitter notes. "Could this be the beginning of a social media investment trend?" There are riskier bets these days.

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