The Wall Street Journal last week had a profile of Marshall Wace, which has perhaps the most delightfully contrarian investment model in finance: listening to the sell side. If you run a big hedge fund (Marshall Wace manages $70 billion), salespeople and analysts at every investment bank will constantly ping you with trade ideas. You can have various models of those trade ideas; two leading ones are:
So the consensus is that if you set up a hedge fund whose investment model was “we’ll just get phone calls from banks and do what they tell us to,” that would not work very well. But Marshall Wace … doesn’t do that exactly, but it kind of does that, and it does work very well. From the Journal: