Should Hedge Fund Analysts Collaborate More?

How collaboration seeds new opportunities

As children we’re all taught to share. But sharing toys that you love is not easy, especially if your Avengers Hot Wheels Monster Truck is considered a fair swap for a one-legged, felt-tip stained Equestrian Barbie.

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We’re told to share with the wisdom that good things will come. And they do. Eventually you’re not the one holding the bedraggled Barbie; you’ve got your hands on your friend’s brand new Transformers collection and it’s not long before you realize you get more out of playing together and using your imaginations, than you would on your own.

When expected to collaborate as adults, and especially as investment professionals, it’s common for traces of that territorial behaviour to come to the fore. But just like your five-year old self, once you make that leap of faith it’s proven to seed new ideas and opportunities. For you, and for the fund.

The concept of the lone-wolf investment professional, while still prowling, has largely been overtaken in favor of the pack mentality – the hedge fund works best when it acts as one. And, it stands to reason that working as a unit serves particularly well in times of scarce prey or encroaching rival packs.

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Funds that make collaboration work know that healthy internal competitive frameworks need to remain intact, but that good things happen when people value the expertise and insights of others in the fund.

This way an individual’s aptitude for thinking differently about markets can be amplified, tested and improved.

Effective collaboration in hedge funds allows individuals and teams to source information for ideas faster, cross-check accuracy and defend theses more thoroughly, identify new areas for discussion and investigation, and uncover patterns that may have gone un-noticed within a smaller group.

Collaboration software helps us tap into our natural tendency to share information, which in turn encourages us to think differently and more creatively. An attribute few hedge fund analysts will turn down.

Now, maybe your best investment idea is not quite as precious as that Avengers Monster Truck, but if you can bring yourself to share nicely, and pull in the perspectives and experiences of others, your idea – and your fund – stand in good stead to differentiate in a crowded market.