New York—One of the books that we've recently passed around the office is Barton Biggs' HedgeHogging. In this generally entertaining and edifying book, Biggs chronicles the trials and tribulations of starting and managing a hedge fund. Among other topics, Biggs' book discusses a common issue facing money managers today—the challenge of finding value-added sources of information and analysis in a world of information overload. Like most investment managers and analysts, Biggs seeks "original information or analysis about the state of the world, an industry, or a company." The problem, Biggs points out, is that 90% of the information out there is "worthless."
Biggs' book describes some of the tactics that he has developed over his long career to help sift through the noise and pick out the meat. His primary tactic is to focus on approximately 25 trusted sources of information and read them regularly. He is particularly fond of Ed Hyman, Jim Paulsen, Jim Walker, Byron Wein, Steve Roach and Chris Woods. He also likes Kiril Sokoloff's "What I Learned This Week" for his original thinking, though he claims that it "needs to be taken with a grain of salt because Kiril has a tendency to present only one side of whatever view he is taking."
Biggs also cites bulge bracket research as a major input in his investment process. While most money managers use bulge bracket research to some degree, Integrity's surveys of the buy have shown, time and time again, that bulge bracket research is not highly valued. This is especially true with regard to small cap coverage. According to Integrity's most recent ResearchFocus report on the US small cap research space, the buy side generally believes that most regional investment banks had significantly better small cap research than their bulge bracket competitors.
All investment managers have their own unique approaches to finding and managing large amounts of information. Yet most investment managers—Biggs included—still face challenges in their research procurement process. In order to help money managers locate and evaluate unique research sources, Integrity is continuing to build out its database of research providers, which now includes over 1500 firms.
Posted at 09:02 am by William Greene
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